The European Parliament has endorsed new regulations intended to strengthen anti-money laundering measures within the cryptocurrency industry.
The legislation, approved on April 24, introduces formal due diligence requirements for cryptocurrency companies. These measures are designed to enhance identity verification procedures for customers, extending to entities such as crypto asset managers. Additionally, these entities will be mandated to report any suspicious activities to relevant authorities.
The regulations will particularly impact crypto-asset service providers (CASPs), including centralized crypto exchanges governed by the Markets in Crypto-Assets (MiCA) regulation, as well as other entities such as gambling services.
MiCA, established by the European Union in June 2023, serves as a regulatory framework for overseeing digital assets and their associated markets. It is slated to be fully enforceable by the end of this year.
To oversee and supervise the implementation of the new regulations, a new agency called the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) has been designated. AMLA’s headquarters will be located in Frankfurt, Germany. However, the legislation is yet to be formally adopted by the Council and published in the EU Official Journal.
Patrick Hansen, the EU strategy and policy director at Circle, expressed anticipation for the vote’s outcome, emphasizing that the package will proceed to be officially adopted by the Council of the EU and will take effect three years later.
Hansen also highlighted that CASPs will be required to adhere to standard Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures, such as customer due diligence. He noted that this requirement aligns with existing obligations for crypto exchanges and custodial wallet providers in the EU under current legislation.
Regarding the final version of the regulations, Hansen described it as a positive outcome for the crypto sector. He acknowledged earlier proposals for stricter measures, particularly concerning KYC requirements for self-custody originators/beneficiaries, but credited industry efforts for advocating a risk-based approach with multiple options, leading to a consensus.
Last month, a majority of the European Parliament’s lead committees removed the 1,000-euro ($1,080) limit on cryptocurrency payments from self-hosted crypto wallets as part of new AML laws.
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