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Crypto in the EU: Strasbourg Targets Crypto with Cross-border Checks in AML Texts 

Published March 19, 2024 4:03 PM
James Morales
Published March 19, 2024 4:03 PM
By James Morales
Verified by Peter Henn

Key Takeaways

  • EU lawmakers have voted to approve a regulation and a directive that form a new anti-money laundering package.
  • The AML package will introduce a harmonized rulebook for crypto asset service providers.
  • Meanwhile, a centralized AML authority will be able to investigate cross-border transactions.

After years of negotiations, legislators have approved key texts for a long-awaited EU anti-money laundering package.

Following an agreement between the European Parliament and the EU Council in January, lawmakers approved legal texts. These will, among other things, require crypto asset service providers (CASPs) to monitor cross-border transactions.

AML Package to Introduce New Crypto Rules

The new package introduces a host of rules, designed to curb the illicit use of cryptocurrencies to launder money. It represents the most significant overhaul of the EU’s AML regulation in many years.

In the context of crypto, one of the most disputed aspects of the new EU regulation  is its treatment of privacy coins and self-custody wallets. 

The finalized text states that “in order to ensure effective application of AML/CFT requirements to crypto assets, it is necessary to prohibit the provision and the custody of anonymous crypto-asset accounts.”

Crucially, however, it adds the caveat that “the prohibition does not apply to providers of hardware and software or providers of self-hosted wallets insofar as they do not possess access to or control over those crypto asset wallets.”

Monitoring Cross-Border Crypto Transactions in the EU

Along with the AML regulation, another directive  establishes a new Anti-Money Laundering Authority (AMLA) based in Frankfurt.

Newly harmonized AML rules and reporting standards will be enforced across the bloc. Now, national regulators will be able to “obtain swiftly cross-border information on the identity of holders of bank, payment, securities and crypto-asset accounts.”

Although all affected parties will have to record certain identifying information, there is a caveat. The directive says: “In order to respect privacy and protect personal data, the minimum data necessary for the carrying out of AML/CFT investigations should be held in centralized automated mechanisms.”

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