The European Union (EU) has officially approved a new regulation aimed at combating money laundering in the realm of crypto-assets. This regulation, known as the Anti-Money Laundering Regulation (AMLR), applies to all crypto-asset service providers (CASPs).
The legislation grants increased authority to Financial Intelligence Units (FIUs) to identify and address instances of money laundering and terrorist financing.
According to an announcement made on Wednesday, these regulations will impact various entities within the crypto ecosystem, including exchanges and brokers regulated under the Markets in Crypto-Assets Regulation (MiCA). Among the provisions are “enhanced due diligence measures,” requiring obligated entities such as crypto-asset managers to report any suspicious activities to FIUs.
Patrick Hansen, the EU Strategy and Policy Director at Circle, highlighted in a tweet that individuals intending to use CASPs for purchasing goods and services with crypto, even outside of formal business relationships, will undergo customer due diligence procedures. This entails verifying their identity and potentially additional Know Your Customer (KYC) and Anti-Money Laundering (AML) measures if the transaction exceeds €1,000.
Moreover, a new entity called the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) is set to be established in Frankfurt. This body will oversee the implementation of the new legislation aimed at combating money laundering, as stated in the announcement.
However, the Council has not yet formally adopted the law and awaits its publication in the EU’s Official Journal, according to the announcement.
Hansen took to Twitter to elucidate how the legislative package affects crypto asset service providers in the EU.
He began by addressing the misinformation circulated by certain crypto media outlets regarding the EU’s purported ban on anonymous crypto transactions. Hansen clarified that the new AMLR law “is not a crypto regulation.”
“It’s a comprehensive Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework that applies to institutions, including what are termed ‘obliged entities’ (OEs). This encompasses all financial institutions, including CASPs (crypto-asset service providers),” he explained.
What is New for CASPs Under EU’s AMLR?
The EU has already mandated that crypto-asset service providers (CASPs) adhere to standard Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures, such as customer due diligence (CDD), within the existing anti-money laundering framework.
Hansen emphasized that the new law doesn’t introduce any significant changes to the existing rules for CASPs. These rules include prohibiting custodial crypto businesses from providing services to anonymous users and preventing CASPs from offering accounts for privacy coins, among other measures.
“In essence, there’s nothing substantially new here. Previous versions of the proposed AMLR suggested a much stricter approach, which would have required KYC for both the originator and beneficiary of self-custody wallets. However, thanks to industry efforts, a risk-based approach with various options was ultimately agreed upon,” Hansen explained.
One notable change, Hansen pointed out, is that the European Parliament had previously proposed an amendment to limit merchant payments from self-custody wallets to €1,000. However, this provision has been omitted from the final version of the law. “Consequently, individuals will be able to use their self-custody wallets for purchasing goods and services in the EU without any restrictions,” Hansen noted.
