Anti-Money Laundering: Preliminary Agreement on Transparency of Crypto Asset Transfers


EU makes it harder for criminals to use cryptocurrencies for money laundering

The EU is making it harder for criminals to misuse cryptocurrencies for criminal purposes. The negotiators of the Council Presidency and the European Parliament have reached a provisional agreement on the proposal to update the rules for information on transfers of funds in extend the scope of these rules to crypto transfersresources† The introduction of this “travel standard” will ensure financial transparency in crypto-asset trading and provide the EU with a strong and proportionate framework that meets the highest international standards for crypto-asset trading, in particular Recommendations 15 and 16 of the Financial Action Task Force (FATF). This measure is particularly topical in the current geopolitical context.

The purpose of this revision is: impose on crypto service providersresources the obligation to collect and make accessible certain data about the sender and beneficiary of the transfers of crypto-assets they process. This is what payment service providers currently do for wire transfers. That ensures the traceability of crypto transfersresourcesto better detect and block possible suspicious transactions.

The new deal will enable the EU to tackle the risks of money laundering and terrorist financing coupled with these new technologies, while reconciling competitiveness, consumer and investor protection and the protection of the financial integrity of the internal market.

The new agreement specifically requires that all sender information goes along with the transfer of crypto assets, regardless of the amount of the crypto-assets that are the subject of the transaction. Specific requirements are imposed on the transfer of crypto-assets between crypto-asset service providers and non-h pursesemountaines

Concerning the Data protectionthe co-legislators agreed that the General Data Protection Regulation (GDPR) would continue to apply to transfers of funds and that no separate data protection regulations would be introduced.

Improved traceability of crypto asset transfers will make it more difficult for individuals and entities subject to: restrictive measures to try to avoid them. In addition, crypto asset service providers will be required to implement appropriate internal policies, procedures and controls to mitigate the risks of misuse of national and EU restrictive measures. More broadly, the sanctions package already applies to all financial actors, including those operating in the cryptocurrency industry.

Finally, Member States will have to ensure that all crypto asset service providers obligated entities under 4e anti-money laundering directive. This will enable the EU to align with the FATF’s recommendations and to homogenize the rules of Member States that have so far taken different approaches.

The co-legislators also agreed to: the urgency to ensure the traceability of crypto transfers-resources and decided to align the timing of the application of this regulation with the timing of the regulation in the crypto asset markets.

context

This proposal is part of a package of legislative proposals to strengthen EU rules on anti-money laundering and anti-terrorist financing (AML-CFT), presented by the Commission on 20 July 2021. The package also includes a proposal for a new EU anti-money laundering authority.

The Council adopted its position on the credit transfer proposal on 1 December 2021. Trilogue negotiations started on April 28 and ended with the provisional agreement to be confirmed by the Council and Parliament before it can be formally adopted.

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