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The European Union’s Anti-Money Laundering and Counter-Terrorist Financing guidelines have been broadened to encompass European cryptocurrency companies, following a decision from the region’s banking watchdog.
The European Banking Authority (EBA) announced on January 16, 2024, that the revised guidelines aim to assist crypto asset service providers (CASPs) in identifying their exposure risk to financial crimes related to “customers, products, delivery channels, and geographical locations.”
The guidelines also provide directives on how crypto firms should adapt their measures to combat financial crimes, which may involve “the use of blockchain analytics tools,” as highlighted by the watchdog. These guidelines came into effect on Dec. 30, 2023.
The EBA asserted that these amendments mark “an important step forward in the EU’s fight against financial crime” and “harmonize the approach” for crypto firms across the union to address money laundering and terrorist financing concerns.
The updated guidelines introduce specific considerations for cryptocurrency and crypto companies, offering guidance to financial firms holding or serving crypto entities.
Guidance on financial crime risk assessment is also included, directing crypto firms to assess potential risks associated with “anonymity-enhancing features,” self-hosted wallets, decentralized platforms, and products facilitating transfers between the company and such services.
In 2023, the EU finalized the Transfer of Funds Regulation (ToFR) governing crypto transfers and the comprehensive and wide-ranging crypto Markets in Crypto-Assets (MiCA) regulations.
MiCA’s investor protections for the crypto sector are scheduled to take effect in December. EU member states can optionally implement an 18-month transitional period for CASPs, allowing them to operate without a license during this period.
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