EU Banking Watchdog Extends Anti-Money Laundering Measures to Cover 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 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 legislation finalized last year on the transfer of funds via digital assets, as well as its landmark regulatory package known as Markets in Crypto Assets (MiCA). The EBA has already 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.

The EBA’s guidance also extends 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 combatting financial crime in the crypto space.

To ensure compliance with the new guidelines, competent authorities are required to report within two months of the guidelines being published and translated into the official EU languages. The guidelines will come into effect on December 30, coinciding with the full implementation of MiCA.

This move by the EBA reflects the increasing regulatory scrutiny on the cryptocurrency industry globally. As cryptocurrencies continue to gain mainstream adoption, regulators are keen to ensure that adequate measures are in place to prevent money laundering and terrorist financing. By providing clear guidelines and harmonizing the approach across the EU, the EBA aims to create a safer and more transparent environment for crypto asset transactions.