Crypto Asset Service Providers (CASP) in Europe would have to implement stringent Know Your Customer (KYC) procedures to combat money laundering following the European Parliament greenlight of new Anti-Money Laundering Regulations (AMLR), according to an April 24 statement.
According to the statement:
“The new laws include enhanced due diligence measures and checks on customers’ identity, after which so-called obliged entities (e.g. banks, assets and crypto assets managers or real and virtual estate agents) have to report suspicious activities to FIUs and other competent authorities.”
The law also incorporates non-financial sectors prone to money laundering or terrorist financing, such as gambling and sports clubs.
Under the AML, a new regulatory body called the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) will oversee and enforce compliance with the revamped protocols.
Notably, this development chiefly impacts centralized exchanges under the EU’s Markets in Crypto Assets (MiCA) umbrella.
MiCA is crucial legislation for the crypto sector in Europe and offers essential regulatory clarity for this burgeoning industry. Market observers have argued that this framework highlights the region’s acknowledgment of the sector’s potential. MiCA was enacted in June 2023 and would become enforceable by the end of this year.
Expected outcome
Patrick Hansen, the EU Strategy and Policy Director for Circle, pointed out that the outcome of the votes was expected, adding that:
“As expected, the EU Parliament plenary passed the new AML package, including the AML Regulation with 479 votes in favour, 61 against, and 32 abstentions. The package will now be formally adopted by the Council of the EU as well and enter into application 3 years later.”
In a separate post, Hansen emphasized that the regulations largely mirror existing anti-money laundering laws, echoing provisions from the MiCA regulation banning privacy coins and the Transfer of Fund Regulation (TFR).
Notably, initial proposals threatening the crypto sector were scaled back. These included proposals to cap self-custody payments at €1,000 and subject decentralized autonomous organizations (DAOs), DeFi, and non-fungible token (NFT) platforms to AMLR obligations.
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Author: Oluwapelumi Adejumo
