The European Union has just taken a significant step in its fight against money laundering and financial fraud by adopting new due diligence measures for cryptocurrency companies. This decision, reached on January 18, 2024, aims to strengthen control over cryptocurrency transactions, particularly those involving self-hosted wallets.
A provisional agreement for increased oversight
According to information reported by CoinDesk, EU lawmakers have reached a provisional agreement on parts of a regulatory package aimed at fighting money laundering. This regulation, known as the Anti-Money Laundering Regulation (AMLR), represents an international initiative to combat sanction evasion and money laundering.
Cryptocurrency companies will now be required to implement due diligence measures for any transaction valued at 1000 euros or more. Furthermore, specific measures aimed at minimizing risks associated with transactions with self-hosted wallets have also been added.
The context of the EU decision on cryptocurrency
Last year, the EU finalized specific AML checks on crypto fund transfers as part of its flagship Markets in Crypto-Assets (MiCA) regulation. In December, the European Parliament and the Council agreed on the establishment of the AML supervisory authority. Wednesday’s agreement specifically concerns the EU’s sixth money laundering directive and the rulebook under the AMLR.
Impact on the industry and cryptocurrency user
The legislative package may have been strengthened through the EU’s complex legislative process, notably due to US sanctions against the crypto anonymization tool Tornado Cash, as well as fears that cryptocurrency could be used to bypass sanctions imposed on Russia and even Hamas. However, a lawmaker in charge of the package discussions in Parliament assured last year that the measures would not seek to ban privacy-enhancing cryptocurrencies.
The industry body, the EU Crypto Initiative, urged lawmakers in May 2023 to remove planned restrictions on privacy-preserving tools or, failing that, to include a “clear boundary between prohibited high-risk anonymous accounts and high-risk anonymization instruments.”
Conclusion
This new agreement is an integral part of the EU’s new anti-money laundering system. It will improve the functioning and cooperation of national systems against money laundering and terrorist financing. The agreement now only needs to be formally adopted by the Parliament and the Council to enter into force.
This article reflects information reported by CoinDesk and demonstrates a decisive turning point in cryptocurrency regulation within the EU, highlighting the importance of security and transparency in the digital asset industry.
