Agreement on transparency in the transfer of cryptographic assets and against money laundering

The European Union is making it harder for criminals to misuse cryptocurrencies for criminal purposes. Negotiators from the presidency of the Council and the European Parliament have come to an agreement on the proposal to update the rules on information accompanying transfers of funds, extending the scope of application of these rules to transfers of cryptoassets.

The introduction of this new regulation will guarantee financial transparency in crypto-asset exchanges and provide the EU with a robust and proportional framework that complies with the highest international standards on crypto-asset exchanges, in particular recommendations 15 and 16 of the Financial Action Task Force (FATF), the global watchdog on money laundering and terrorist financing. This is particularly appropriate in the current geopolitical context.

The objective of this reform is to introduce the obligation for crypto-asset service providers to collect and make accessible certain information on the origin and beneficiary of the transfers of cryptoassets they operate. This is what payment service providers are currently doing for bank transfers, which ensure traceability of crypto-asset transfers to better identify and block potentially suspicious transactions.

The new agreement will allow the EU to address the risks of money laundering and terrorist financing involved in the use of these new technologies, while reconciling competitiveness, consumer and investor protection, and the protection of the financial integrity of the internal market.

The new agreement requires the full set of originator information to travel with the transfer of cryptoassets, regardless of the amount of cryptoassets being transacted.

In terms of data protection, legislators agreed that the General Data Protection Regulation (GDPR) is still applicable to fund transfers and that no separate data protection rules will be established.

Improved traceability of crypto-asset transfers will also make it more difficult for persons and entities subject to restrictive measures to attempt to circumvent them. Furthermore, crypto-asset service providers will be required to put in place adequate internal policies, procedures and controls to mitigate the risks of evasion of national and Union restrictive measures.

More generally, the totality of sanctions already applies to all natural and legal persons, including those operating in the cryptocurrency sector.

In due course, Member States will have to make sure that all crypto-asset service providers qualify as obliged entities under the fourth AML directive. This will allow the EU to align itself with the FATF recommendations and level the playing field between Member States, which have so far developed different approaches in this regard.

Legislators also agreed on the urgency of ensuring the traceability of crypto-asset transfers and opted to align the implementation schedule of this regulation with that of the regulation of crypto-asset markets (MiCA).

This proposal is part of a package of legislative proposals to strengthen EU rules against money laundering and the financing of terrorism (AML/CFT) presented by the Commission on 20 July 2021. The package also includes a proposal to create a new EU authority to combat money laundering.


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