Read the EU’s new anti-money laundering rules and agreement in one article

Author : Sandali Handagama

Source: Coindesk

The European Parliament and the Council of the European Union have adopted Tentative agreement reached on anti-money laundering regulatory package for cryptocurrencies;

The agreed framework includes requiring cryptocurrency firms to regulate transactions of 1,000 euros or more Conduct customer due diligence;

While the industry is largely satisfied with the outcome of the framework, some believe it may not be as fair as policymakers predicted.

Cryptocurrency industry players are concerned that new anti-money laundering rules agreed by EU policymakers are more stringent than measures applicable to traditional financial institutions. To be strict. EU policymakers this week agreed on a comprehensive anti-money laundering regulatory framework that includes strict requirements for cryptocurrency companies.

Under the agreed terms, service providers must strictly adhere to customer verification requirements and take steps to reduce transaction risks involving self-hosted wallets and cross-border transfers.

While the stated goal is to level the playing field by applying the same rules to cryptocurrency companies and banks, some in the industry are concerned that policymakers insist It may be a bit flippant that digital asset companies are subject to the same money laundering scrutiny as other financial institutions.

Robert Kopitsch, secretary-general of the European Blockchain Industry Advocacy Group, said, "Despite enthusiastic press statements from co-lawmakers about the agreement, because crypto assets The thresholds for service providers and other financial institutions are not the same, so a level playing field is not created.”

The EU cryptocurrency industry is still in the legislative session There has been vigorous lobbying to exclude NFTs and DeFi from the scope of the plan, and may even have succeeded (at least temporarily) in blocking restrictions on privacy-enhancing tools.

Anti-money laundering regulations

The EU made history last year. The first comprehensive cryptocurrency regulatory framework has been finalized by a major jurisdiction. In addition to the landmark Markets in Crypto-Assets (MiCA) regulation, the group has also introduced rules for collecting cryptocurrency transfer information (TFR) as part of wider anti-money laundering regulations.

AMLR is a broad action taken by a group of 27 European countries to combat illicit financial flows and sanctions evasion. It targets a wide range of potential money laundering vehicles, from jewelery and luxury cars to major football clubs, and caps large cash payments within the EU at €10,000.

AMLR promotes the development of a single rulebook for the EU and the establishment of a regulatory body that will also have jurisdiction over the cryptocurrency industry. Eero, the MEP responsible for the regulatory negotiations Heinaluoma told a press conference on Thursday that while the AMLR package had not yet been finalized, "the main political principles have been agreed upon".

Heinaluoma added that technical discussions on cryptocurrency-related details will begin on Friday. Kopitsch said these discussions will not involve adjusting the actual measures, but rather ensuring that the text is technically sound.

NFT and DeFi are out, what about encryption and anonymity tools?

While there has been some heated discussion over whether to bring NFTs within the scope of regulation, industry advocacy group the European Cryptocurrency Initiative (EU Vyara Savova, senior policy director at the Crypto Initiative, said on a conference call on Wednesday that these assets are likely to be excluded from the package.

Tommaso Astazi also said that NFT and decentralized finance (DeFi) may still be beyond the scope of the regulatory package. "I think for sure the scope has not been expanded. The scope is MiCA's scope," Astazi told CoinDesk in an interview on Thursday. He explained that cryptocurrency service providers subject to MiCA will also be subject to AMLR, while not being subject to anti-money laundering laws (in the case of DeFi and potentially For NFTs), these measures do not apply.

Marina Markezic, co-founder of the EU Encryption Initiative, said on a conference call on Wednesday that there are concerns about the Following the Tornado Cash sanctions, AMLR will seek to outlaw or restrict crypto-anonymity tools and is concerned that cryptocurrencies are being used by sanctioned entities such as Russia.

Astazi said on Thursday it was unclear whether policymakers were continuing to discuss the tools or whether they would be included in the final text.

Do banks and cryptocurrency companies have the same rules?

In Heinaluoma’s own words, AMLR seeks to treat crypto asset service providers on an equal footing with credit institutions, subjecting both to equal obligations.

Heinaluoma said at a press conference on Thursday: "The most important thing is that the obligations that the banking industry has to fulfill now and in the future will also fully apply to crypto. Asset business." He added, "This is important because we know that a lot of money is flowing from traditional payments into the cryptocurrency space," Kopitsch said that the agreed The measures apply different thresholds for customer due diligence by cryptocurrency companies, cash transactions and financial institutions. The legal text shows that while all regulated entities must conduct customer due diligence on transactions above 10,000 euros, financial and credit institutions and cryptocurrency companies must conduct comprehensive customer checks on transactions above 1,000 euros. That's where things are different, he said.

Cryptocurrency companies must also conduct basic know-your-customer (KYC) checks on all incidental transactions (i.e., transactions outside of a business relationship). "For incidental transactions, they still need to identify the customer and verify the customer's identity. Now that's a change." Astazi said, adding that companies are currently able to make such transfers in some EU member states, as existing anti-money laundering requirements are not always enforced uniformly across countries.

That's not what the industry wants, especially since it doesn't matter for fully regulated entities, but Kopitsch said imposing different thresholds “Suggesting that the technical advantages of blockchain technology have not yet been recognized.” He added, "As an industry, we can accept the final outcome of the AMLR negotiations because the consistency of its regulatory scope with MiCA and the TFR has been ensured, which is key."

While it is difficult to give an exact timetable, Savova expects technical discussions on the AMLR to be "fairly intensive" as policymakers hope to bring the package to parliament in April ahead of upcoming elections. approve. “This means that for us, as representatives of the cryptocurrency industry, AMLR’s work is proceeding at a faster pace.”