European Union Cracks Down Against Money Laundering and Terror Financing

Regulators in the European Union today reached a provisional deal on parts of a comprehensive regulatory package to battle money laundering that will force all crypto firms to run due diligence on their customers. The anti-money laundering regulations include the creation of a single rulebook and set up a supervisory authority that will also have an impact on the crypto sector.

Anti-Money Laundering Regulations

These regulations will affect entities such as financial institutions, banks, real estate agencies, asset management services, casinos, and merchants play a crucial role as gatekeepers in the anti-money laundering and countering the financing of terrorism (AML/CTF) framework as they have a privileged position to detect suspicious activities.

Crypto Under Scrutiny?

Central to these regulations is an intensified focus on the crypto sector. Crypto-asset service providers (CASPs) are now mandated to conduct meticulous due diligence on their customers. This involves a stringent verification process for the facts and information provided by clients, coupled with mandatory reporting of any flagged suspicious activities.

Tailored Guidelines for Service Providers

In a coordinated effort, the Council and Parliament have introduced specific guidelines and due diligence measures for cross-border correspondent relationships involving crypto-asset service providers.

“This agreement is part and parcel of the EU’s new anti-money laundering system. It will improve the way national systems against money laundering and terrorist financing are organized and work together. This will ensure that fraudsters, organized crime, and terrorists will have no space left for legitimizing their proceeds through the financial system,”

Vincent Van Peteghem, Belgian Minister of Finance

Collaboration is Key!

Finance Ministers from the EU’s 27 member states, alongside representatives from the European Parliament and Council, have unanimously agreed on measures requiring crypto firms to apply “customer due diligence measures when carrying out transactions amounting to €1,000 ($1,090) or more.”

How will these rules impact the market and how will people adapt to them?