Anti-money laundering: provisional agreement on the transparency of cryptocurrency transfers


The EU makes it harder for criminals to use cryptocurrencies for money laundering

The EU is making it more difficult for criminals to misuse cryptocurrencies for criminal purposes. The negotiators of the Presidency of the Council and of the European Parliament reached a provisional agreement on the proposal to update the rules on information accompanying transfers of funds in extending the scope of these rules to cryptocurrency transfersresources. The introduction of this “travel standard” will ensure financial transparency in cryptocurrency trading and provide the EU with a robust and proportionate framework that meets the highest international standards for cryptocurrency trading, especially task recommendations 15 and 16 Financial Action Force (FATF). This measure is particularly appropriate in the current geopolitical context.

The purpose of this review is impose on cryptographic service providersresources the obligation to collect and make accessible certain data about the originator and beneficiary of the cryptocurrency transfers they process. This is what payment service providers currently do for wire transfers. That will ensure the traceability of cryptocurrency transfersresourcesin order to better identify any suspicious transactions and block them.

The new agreement it will enable the EU to address the risks of money laundering and terrorist financing linked to these new technologies, while at the same time reconciling competitiveness, consumer and investor protection and the protection of the financial integrity of the internal market.

The new agreement specifically requires all originator information to travel with the cryptocurrency transfer, whatever the amount of the cryptocurrencies involved in the transaction. Specific requirements are established in relation to cryptocurrency transfers between cryptocurrency service providers and wallets not hAndmountainAndS..

As for the Data protectionthe co-legislators have agreed that the General Data Protection Regulation (GDPR) remains applicable to transfers of funds and that no separate data protection regulations will be introduced.

Better traceability of cryptocurrency transfers will make the situation more difficult for individuals and entities subject to it restrictive measures to try to get around them. Additionally, cryptocurrency service providers will need to apply appropriate internal policies, procedures and control mechanisms to mitigate the risk of misuse of EU and national restrictive measures. More generally, the sanctions package already applies to all financial players, including those operating in the cryptocurrency sector.

Finally, Member States will need to ensure that all cryptocurrency service providers are obligated subjects under the 4th anti-money laundering directive. This will allow the EU to align with the FATF recommendations and to homogenize the rules of the Member States which have so far applied different approaches in this regard.

The co-legislators also agreed the urgency of ensuring the traceability of cryptocurrency transfers-resources and has decided to align the timing of application of this regulation with the timing of the regulation on the cryptocurrency markets.

context

This proposal is part of a package of legislative proposals to strengthen EU anti-money laundering and terrorist financing (AML-CFT) rules, presented by the Commission on 20 July 2021. The package also contains a proposal to create a new EU Anti-Money Laundering Authority.

The Council agreed its position on the remittance proposal on 1 December 2021. The trialogue negotiations started on 28 April and ended with the provisional agreement which still needs to be confirmed by the Council and Parliament before it can be formally adopted.

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