EU Banking Watchdog Expands Anti-Money Laundering Measures to Include Crypto Firms

The European Union’s banking watchdog, the European Banking Authority (EBA), has issued new guidance for cryptocurrency firms to comply with its anti-money laundering and terrorist-financing requirements. This move aims to harmonize the approach that crypto asset service providers (CASP) across the EU should adopt in order to combat financial crime.

In a press statement, the EBA highlighted the increased risks associated with crypto-assets, such as the speed of transfers and the potential for user identity concealment. Therefore, it emphasized the importance for CASPs to be aware of these risks and implement effective measures to mitigate them.

This latest guidance builds upon the EU’s efforts to regulate the transfer of funds via digital assets, as outlined in its Markets in Crypto Assets (MiCA) regulatory package finalized last year. The EBA has previously published guidelines on risk-based supervision of CASPs and is currently consulting on proposed guidelines to prevent the abuse of crypto transfers, aligning with recommendations from the global watchdog, the Financial Action Task Force (FATF). Additionally, the EBA is seeking feedback on further guidance related to internal policies and controls that CASPs should have in place.

The EBA’s new guidelines also extend to other credit and financial institutions that have CASPs as their customers or are exposed to crypto assets. This recognition of the interdependence of the financial sector emphasizes the need for a comprehensive approach to combating financial crime in the crypto space.

Competent authorities are required to report their compliance with the new guidelines within two months of their publication in the official EU languages. The guidelines are set to apply from December 30, coinciding with the full implementation of MiCA.

This move by the EBA reflects the growing recognition of the need for robust regulatory measures in the cryptocurrency industry. As digital assets continue to gain popularity and adoption, ensuring compliance with anti-money laundering and terrorist-financing requirements is crucial to maintaining the integrity of the financial system. By harmonizing the approach across the EU, the EBA aims to create a level playing field for CASPs and enhance the overall security and trustworthiness of the crypto market.