EU Implements New Anti-Money Laundering Regulation for Crypto

The European Union (EU) has officially approved a new anti-money laundering regulation (AMLR) that applies to all crypto-asset service providers (CASPs).

The regulation aims to empower Financial Intelligence Units (FIUs) to better detect and combat money laundering and terrorist financing activities.

What the Regulation Means for CASPs

The legislation, part of the Markets in Crypto-Assets Regulation (MiCA), imposes enhanced due diligence measures on crypto exchanges and brokers. CASPs, including crypto-asset managers, are now obligated to report suspicious activities to FIUs.

CASPs must conduct customer due diligence, including identity verification and potential additional Know Your Customer (KYC)/AML measures, for transactions exceeding €1,000.

A new supervisory body, the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA), will oversee the implementation of the regulation from Frankfurt.

Clarification by Patrick Hansen

Patrick Hansen, Circle’s EU Strategy and Policy Director, clarified misconceptions about the regulation via Twitter. He emphasized that the AMLR is not solely a crypto regulation but a broader anti-money laundering and countering the financing of terrorism (AML/CFT) framework applicable to all financial institutions, including CASPs.

Impact on CASPs

Under the new regulation, CASPs are required to adhere to standard KYC/AML procedures, including customer due diligence, which was already mandated under existing anti-money laundering frameworks.

Prohibitions on providing services to anonymous users and offering accounts for privacy coins remain unchanged. However, a proposed amendment to limit merchant payments from self-custody wallets to €1,000 has been removed from the final version of the regulation.

Hansen reassured that individuals can continue to use self-custody wallets for purchasing goods and services in the EU without restrictions.

The regulation awaits formal adoption by the Council and publication in the EU’s Official Journal.