The European Parliament has given its approval to new regulations aimed at establishing formal due diligence obligations for cryptocurrency companies as part of the ongoing fight against money laundering.
Encompassing measures to enhance "due diligence measures and identity checks" for clients, the legislation extends its scope to entities like crypto asset managers. These entities are now mandated to report any suspicious activities to the relevant authorities.
The approved regulations, passed on April 24, will impact cryptocurrency asset service providers (CASPs), including centralized cryptocurrency exchanges regulated under the Market for Cryptoassets (MiCA). Additionally, other entities such as gambling services will also be subject to these regulations. MiCA, launched by the European Union, serves as a regulatory framework for digital assets and their respective markets. Enacted in June 2023, the bill is scheduled for full implementation by year-end.
The oversight and supervision of the new rules will be the responsibility of a newly established agency, the Anti-Money Laundering and Combating the Financing of Terrorism Authority (AMLA). Frankfurt, Germany, is set to host the offices of AMLA. However, the legislation has yet to be formally adopted by the Council and published in the EU Official Journal.
Circle EU Strategy and Policy Director Patrick Hansen expressed his anticipation of the voting outcomes, expecting formal adoption by the EU Council with a three-year timeline for implementation. Hansen emphasized the need for CASPs to comply with standard know-your-customer (KYC) and anti-money laundering (AML) procedures, such as customer due diligence, highlighting that this requirement is not novel, as existing legislation already mandates compliance for all cryptocurrency exchanges and custodial wallet providers in the EU.
Hansen hailed the final version of the regulations as a "positive outcome" for the crypto industry. He noted that earlier versions of the proposed Anti-Money Laundering Regulation (AMLR) suggested a more stringent approach, including KYC requirements for self-hosted sponsors/beneficiaries. However, he commended industry efforts that advocated for a risk-based approach and offered multiple options, ultimately leading to consensus. In a related development, the majority of the European Parliament's leading committee recently removed a €1,000 ($1,080) limit on cryptocurrency payments from self-hosted crypto wallets as part of a new anti-money laundering law.
