European Parliament Greenlights Stricter Due Diligence Rules for Cryptocurrency Companies
Summary:
The European Parliament has authorized legislation mandating stringent due diligence for cryptocurrency companies to prevent money laundering. The laws, to be enforced by a new anti-money laundering agency, AMLA, extend to various entities including crypto-asset managers and crypto-asset service providers like centralized crypto exchanges. However, formal approval from the Council is pending. The Director of EU Strategy and Policy at Circle, Patrick Hansen, praised the final version, noting it presents a fair approach after industry-led advocacy led to consensus. The legislation follows the removal of a 1,000-euro limit on transactions from self-hosted crypto wallets.
Formal due diligence responsibilities have been officially mandated for cryptocurrency firms by the European Parliament, in an effort to quash money laundering. The recent legislation reinforces identity verifications and due diligence protocols for clients, covering entities such as managers of crypto assets. The latter are additionally compelled to alert authorities about any potentially suspect actions.
Crypto-asset service providers (CASPs), notably centralized crypto exchanges subject to MiCA (Markets in Crypto-Assets Regulation), and a range of other entities including those in gambling services, stand to be affected by this rule, enacted on 24th April.
The regulatory structure of MiCA, designed by the European Union to monitor digital assets and their related markets, came into being in June 2023 and will reach full enforceability by the end of this year.
AMLA, the Authority for Anti-Money Laundering and Countering the Financing of Terrorism, has been given the responsibility of supervising and implementing the new rule. It is based in Frankfurt. Nevertheless, its adoption has not been formally sanctioned by the Council and it's pending publication in the EU Office Journal.
Patrick Hansen, Circle’s Director of EU Strategy and Policy, conveyed his eagerness regarding the vote's results in an X post. He indicated that it will officially be recognized by the Council of the EU and be implemented three years hence.
Importantly, Hansen shared in his post that these CASPs will have to conform to customary KYC/AML procedures including customer due diligence (CDD). He highlighted the fact that it's not a new directive, since all crypto exchanges and custodial wallet providers in the EU are already required to follow these regulations under existing laws.
Hansen deemed the final version as a "positive outcome" for the crypto industry. He observed that initial versions of the proposed AMLR suggested a harsher stance, demanding KYC on the self-custody originator/beneficiary. However, he praised the industry's advocacy for a risk-based approach providing multiple alternatives, which brought about agreement.
Moreover, a large number of the European Parliament’s primary committees removed the 1,000-euro ($1,080) cap on cryptocurrency transactions from self-hosted crypto wallets last month as part of new Anti-Money Laundering laws.
In related news, the suspension of FTX Europe's license will continue in Cyprus until September, as reported by Magazine.
Published At
4/25/2024 10:16:07 AM
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