Adoption of new regulations across the European Union (EU) - Enhanced Rules on Cryptocurrencies

What happened?

📅 On Thursday, 18/01/2024, the European Council and Parliament provisionally agreed on anti-money laundering (AML) rules specifically targeting cryptocurrencies.

We have identified many of these points as essential which are outlined below:

Customer Due Diligence (CDD) Measures:

  • Exchanges and wallet providers must now apply CDD for transactions of €1000 or more.
  • Verification and reporting of suspicious activities are now mandatory.
  • Applies to transactions originating from conventional financial institutions as well as self-hosted crypto wallets.

Cash Payments:

  • The EU-wide cash payment limit is now set at €10,000 to combat money laundering.
  • Member states have the flexibility to impose a lower limit.
  • Obliged entities must identify and verify individuals in occasional cash transactions between €3,000 and €10,000.

Enhanced Due Diligence for Cross-Border Transactions:

  • Cross-border correspondent relationships that involve crypto-asset service providers (CASPs) will undergo heightened due diligence.
  • Acknowledgment of the distinct risks linked with international transactions in the cryptocurrency space.

Financial Intelligence Units (FIUs):

  • FIUs immediately obtain access to a wide array of data, encompassing tax information, funds, and cryptocurrency transfers.
  • The system has undergone an upgrade to facilitate quicker dissemination of reports.
  • Close cooperation in cross-border cases.

AML Authority:

  • Establishment of the AML Authority as a specialized supervisory body responsible for overseeing money laundering (ML) and terrorist financing (TF) safeguards in the EU Financial System.

Expanded List of Obliged Entities:

  • The recent regulations encompass a significant portion of the cryptocurrency sector, requiring all Crypto-Asset Service Providers (CASPs) to perform due diligence on customers.
  • Verification and reporting of suspicious activity are now mandatory.

Beneficial Ownership:

  • Harmonized and transparent rules on beneficial ownership.
  • Ownership and control elements are assessed to identify every beneficial owner.
  • Threshold set at 25% ownership.
  • Clarifications on multi-layered ownership and control structures.

High-Risk Third Countries:

  • Enhanced due diligence for transactions involving high-risk third countries.
  • Justification for additional countermeasures at the entity or member state level.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.