EU Banking Watchdog Issues Anti-Money Laundering Rules for Crypto Firms
The European Banking Authority (EBA) has published new guidelines extending its anti-money laundering (AML) and counter-terrorism financing (CTF) requirements to cryptocurrency companies. The rules provide guidance to crypto asset service providers (CASPs) on identifying risk exposure and effectively mitigating financial crime vulnerabilities.
- EBA extended the scope of existing AML/CFT guidelines to harmonize the compliance approach for CASPs across the EU.
- Guidelines outline risk factors related to crypto products, customers, and jurisdictions that indicate potential illicit finance abuse.
- The EU aims to curb the anonymity risks posed by the speed of crypto transfers as part of a broader regulatory push.
Per the EBA, applying unified guidance closes an oversight gap and ensures CASPs implement adequate controls as part of the risk-based AML/CFT approach. This includes properly vetting customers, monitoring transactions, and filing suspicious activity reports.
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EU Watchdog outlines various crypto risk factors
The non-binding guidelines describe various risk factors CASPs should weigh when evaluating their anti-financial crime procedures. This spans the risk profile of customers, features of crypto offerings, delivery channel risks, and exposure to high-risk countries.
For example, peer-to-peer crypto transfers and anonymizing products present elevated risks that call for enhanced due diligence. By considering their business profile, CASPs can direct compliance resources to the most critical areas.
The guidance also covers banks and other financial institutions with exposure to the crypto ecosystem, either through serving CASP clients or via direct crypto asset dealings. This captures regulatory attention on the links between traditional finance and emergent digital asset risks.
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The move aligns with broader EU efforts to regulate cryptocurrencies through legislation like the Markets in Crypto-Assets (MiCA) framework passed last year. As the bloc continues finalizing rules in areas like crypto transfers, the EBA has published additional consultation papers on topics like CASP risk-based supervision.
By extending guidelines to CASPs, the EU aims to implement consistent safeguards, preventing the sector from becoming a haven for illicit financing.
