In a bid to tackle money laundering in the European Union, the European Council adopted new rules to make cryptocurrency-asset transfers traceable, according to the official press release published on Tuesday, May 16th.
According to the text, the new rules are meant to ensure the financial transparency of crypto exchanges while providing the EU with a solid framework to comply with international standards, making it substantially harder for crypto-assets to be used for criminal purposes.
As Swedish Finance Minister Elisabeth Svantesson, representing the Council’s rotating presidency, explained:
Today’s decision is bad news for those who have misused crypto-assets for their illegal activities, to circumvent EU sanctions or to finance terrorism and war. Doing so will no longer be possible in Europe without exposure—it is an important step forward in the fight against money laundering.
Most notably, under the new rules, the crypto service providers are obliged to “collect and make accessible certain information about the sender and beneficiary” of the transfers, “regardless of the amount of crypto” being transacted, the announcement says, arguing that this way the EU will be able to identify and block suspicious transactions.
The regulation also addresses the issues about the security of the collected data multiple times, saying that crypto service providers “shall ensure at all times that the transmission of personal data … is conducted in accordance with [existing data protection rules].”
On the same day, the EU’s finance ministers also approved the so-called Markets in Crypto Assets (MiCA) regulation, making the bloc the first major economy to introduce a “crypto licensing regime,” Coindesk wrote, requiring wallet providers and exchanges to have registered licenses and comply with a set of transparency regulations similar to ‘normal’ financial institutions.
The decisions are part of a wider legislative package, proposed to strengthen the EU’s anti-money-laundering and countering terrorism financing (AML/CTF) rules pitched by the Commission back in July 2021. The trilogue negotiations between the EU institutions were finished by the summer of 2022, ending in a provisional agreement on June 29th last year. Yesterday, therefore, only marked the formal adoption of the law, finalizing the legislative process.
The package would also establish a dedicated Anti-Money Laundering Authority (AMLA) to directly supervise certain types of credit and financial institutions “if they are considered risky,” with complete coverage of the EU’s internal market. However, the initiative hasn’t been finalized yet, because the Council is still divided over what location to use for establishing the AMLA headquarters.
