Crypto Companies Face Stricter Anti-Money Laundering Regulations from the European Union

Crypto companies may find detailed advice on how to improve their anti-money laundering and counter-terrorism funding procedures in the updated guidelines.

Important development in the European Union’s continuous fight against financial crime is the expansion of its anti-money laundering and counter-terrorism financing regulations to include European cryptocurrency firms.

On January 16, 2024, the European Banking Authority (EBA) made this decision. Its purpose is to help crypto asset service providers (CASPs) better detect and handle financial crimes that can originate from different sources, including customers, products, delivery channels, and locations.

Crypto companies may find detailed advice on how to improve their anti-money laundering and counter-terrorism funding procedures in the updated guidelines.

Their compliance efforts should benefit from the addition of blockchain analytics technologies, which is a noteworthy recommendation. The formal date of implementation for these revised standards is December 30, 2023.

According to the EBA, these changes are a major step forward in the battle against financial crime in the EU. Additionally, they want to establish a unified policy for crypto companies across the country, which will help reduce the likelihood of money laundering and the funding of terrorism.

Included in the revised standards are provisions addressing the risks associated with cryptocurrencies and crypto companies, as well as recommendations for financial institutions that own or provide services to crypto businesses.

This amendment intends to provide clear guidelines to conventional financial institutions participating in this arena, acknowledging the particular difficulties and dangers involved with the crypto economy.

In addition, the standards provide crypto companies with comprehensive advice on how to evaluate the risks of financial crime.

The company has asked these businesses to assess the dangers of self-hosted wallets, decentralized platforms, products that help users send and receive funds across these services, and features that make it easier to remain anonymous online.

The EU’s Transfer of Funds Regulation (ToFR), which regulates crypto transactions, and the all-encompassing Markets in Crypto-Assets (MiCA) laws were both completed in 2023.

The clauses of MiCA that aim to safeguard crypto investors are set to go into force in December. Nevertheless, member states of the European Union have the choice to provide CASPs an 18-month grace period, during which they may keep operating without a license.

Ultimately, the expansion of the AML/CFT regulations to encompass European crypto firms is a major step forward in the regulatory arena, with the dual goals of making the crypto industry a safer and more compliant place to do business and combating the ever-changing threats presented by financial crime.

Also Read: Fidelity is the second-place issuer of bitcoin ETFs to reach $1 billion in inflows January 19, 2024