The European Banking Authority (EBA) has shared its guidance on money laundering (ML) and terrorist financing (TF) for crypto asset service providers (CASPs).
All banks must adhere to strict Anti-Money Laundering (AML) and Know Your Customer (KYC) rules, and crypto firms are no different. The guidelines are said to “extend” existing rules to mitigate this risk – a prime concern for regulators globally.
The EBA notes that the speed of transactions using blockchain is part of the challenge, along with some protocols and services that seek to cover the tracks of transactions of bad actors. There are, of course, sanctioned individuals and firms who have sought to utilize crypto to evade these sanctions.
The EBA adds that given the interdependence of the financial sector, the new Guidelines incorporate guidance addressed to other credit and financial institutions that have CASPs as their customers or have exposure to crypto activity or services not authorized under EU regulation. The guidance will also incorporate the Travel Rule originally proposed by FATF. The Travel Rule demands record-keeping for both buyers and sellers of crypto transactions. This information is fairly detailed.
The deadline for member state regulators to report whether they comply with the new Guidelines will be two months after the publication of the document and will come into force on December 30, 2024.
Along with other regulations, the new Guidelines are part of the MiCA legislation, which was approved last year. Regulation (EU) 2023/1114 brings crypto-asset services and activities within the EU regulatory scope and ensures that CASPs become subject to EU AML/CFT obligations and supervision.