Crypto Asset Service Providers (CASP) in Europe should implement strict Know Your Customer (KYC) procedures to combat money laundering following the European Parliament’s green light for the new Anti-Money Laundering Regulations (AMLR), according to a statement of April 24.
According to the statement:
“The new laws include enhanced due diligence measures and customer identity checks, after which so-called obliged entities (e.g. banks, asset and crypto asset managers or real estate and virtual real estate brokers) will have to report suspicious activities to FIUs and other competent authorities. .”
The law also covers non-financial sectors that are susceptible to money laundering or terrorist financing, such as gambling and sports clubs.
Under the AML, a new regulatory body, the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA), will monitor and enforce compliance with the updated protocols.
This development particularly affects centralized exchanges under the EU umbrella Markets in Crypto Assets (MiCA).
MiCA is crucial legislation for the crypto sector in Europe, providing essential regulatory clarity for this fast-growing industry. Industry observers have argued that this framework highlights the region’s recognition of the sector’s potential. MiCA came into effect in June 2023 and would become enforceable at the end of this year.
Expected outcome
Patrick Hansen, EU Director of Strategy and Policy for Circle, pointed out that the outcome of the votes was expected, adding that:
“As expected, the EU Parliament plenary adopted the new AML package, including the AML Regulation, with 479 votes in favor, 61 against and 32 abstentions. The package will now also be formally adopted by the Council of the EU and enter into force three years later.”
In a separate message, Hansen emphasized that the regulations largely reflect existing anti-money laundering laws, following provisions of the MiCA Regulation banning privacy coins and the Transfer of Fund Regulation (TFR).
Notably, initial proposals that threatened the crypto sector were scaled back. These included to suggest to limit self-custody payments to €1,000 and subject decentralized autonomous organizations (DAOs), DeFi and non-fungible token (NFT) platforms to AMLR obligations.