EU Tightens Crypto Regulations with Provisional AML Agreement

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Hongji Feng

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Hongji Feng

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Hongji is a crypto and tech reporter. He graduated from Northwestern University's Medill School of Journalism with a Bachelor's and a Master's. He has previously interned at HTX (Huobi Global),...

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January 18, 2024 01:01 EST

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The European Union has provisionally agreed on new anti-money laundering (AML) regulations specifically targeting the crypto sector.

According to a press release published by the European Council, the provisional agreement reached by Council and the Parliament focuses on enhancing measures to safeguard both EU citizens and its financial system from money laundering and terrorist financing activities.

New Agreement Targets Crypto Sector

The new AML regulations extend to “most of the crypto sector,” requiring all crypto asset service providers (CASPs) to conduct due diligence on their customers. This includes verifying facts and information about their customers and reporting any suspicious activity.

“According to the agreement, CASPs will need to apply customer due diligence measures when carrying out transactions amounting to €1000 or more,” said the Council. “It adds measures to mitigate risks in relation to transactions with self-hosted wallets.”

The agreed measures include enhanced due diligence requirements specifically for crypto-asset service providers involved in cross-border correspondent relationships. This is a targeted effort to strengthen oversight and increase the security of international crypto transactions.

“Credit and financial institutions will undertake enhanced due diligence measures when business relationships with very wealthy (high net-worth) individuals involve the handling of a large amount of assets,” said the Council.

Enhancing the EU’s Fight Against Financial Crimes

The next steps for the agreement involve finalizing the agreed-upon texts. These will then be presented to representatives in the EU’s Committee of Permanent Representatives and the European Parliament for their approval.

Following the approval, the Council and Parliament will need to formally adopt the measures. Once adopted, they will be published in the EU’s Official Journal and subsequently come into force.

“This agreement is part and parcel of the EU’s new anti-money laundering system,” said Belgian Minister of Finance Vincent Van Peteghem. “It will improve the way national systems against money laundering and terrorist financing are organised and work together.”

“This will ensure that fraudsters, organised crime and terrorists will have no space left for legitimising their proceeds through the financial system,” said Van Peteghem.

In March 2023, the members of the European Parliament (MEPs) from the Economic and Monetary Affairs and Civil Liberties, Justice and Home Affairs committees approved stricter AML measures countering the financing of terrorism (CFT).