EU STRENGTHENS CRYPTO TRANSACTION RULES OVER AML CONCERNS 

The EU Parliament and Council have reached a provisional agreement on a set of anti-money laundering and anti-terrorist financing laws as part of broader efforts to combat financial crimes.

While cryptocurrencies are not the primary focus of these new laws, the crypto industry is explicitly addressed in several provisions.

Increased Reporting on Crypto Transactions

Cryptocurrency-related companies have increasingly looked to establish themselves in the European Union due to its more streamlined regulatory framework compared to the US, where the SEC has initiated numerous lawsuits without clear guidance.

To further enhance the existing EU framework, officials have expanded regulations to combat financial crimes both within and outside Europe.

One notable provision requires crypto companies to conduct due diligence for any digital asset transaction exceeding 1,000 EUR.

“The new rules will cover most of the crypto sector, forcing all crypto-asset service providers (CASPs) to conduct due diligence on their customers. […] CASPs will need to apply customer due diligence measures when carrying out transactions amounting to €1000 or more. It adds measures to mitigate risks in relation to transactions with self-hosted wallets.”

Similar regulations have been imposed on luxury goods traders, football clubs, and agents, adhering to typical European standards.

Enhanced Due Diligence Procedures

The new regulations will implement enhanced due diligence procedures, particularly for individuals with high net worth. Identity verifications will be required for cash transactions ranging from 3,000 to 10,000 EUR.

Additionally, strict verification protocols will apply to transfers to and from “high-risk third countries” with perceived deficiencies in their legislation regarding terrorism and financial crimes.

Centralized Information Gathering

Under the new rules, the financial intelligence units (FIUs) of each EU country will gain “immediate and direct” access to information, including financial data, related to the aforementioned measures.

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