The European Union has just taken a significant step forward in its fight against money laundering and financial fraud by adopting new due diligence measures for cryptocurrency businesses. The decision, taken on 18 January 2024, aims to tighten controls on cryptocurrency transactions, particularly those involving self-hosted wallets.
A provisional agreement for greater control
According to information reported by CoinDesk, EU lawmakers have reached a provisional agreement on parts of a regulatory package aimed at combating money laundering. The regulation, known as the Anti-Money Laundering Regulation (AMLR), represents a global initiative to combat sanctions evasion and money laundering.
Cryptocurrency companies will now be required to implement due diligence measures for any transaction worth €1,000 or more. In addition, specific measures to minimise the risks associated with transactions with self-hosted wallets have also been added.
The background to the EU’s decision on cryptocurrency
Last year, the EU finalised specific AML checks on cryptocurrency fund transfers as part of its flagship Crypto Asset Markets (MiCA) regulation. In December, the European Parliament and the Council agreed on the establishment of the AML supervisory authority. Wednesday’s agreement relates specifically to the EU’s Sixth Money Laundering Directive and the rulebook under the AMLR.
Impact on the cryptocurrency industry and users
The legislative package may have strengthened through the EU’s complex legislative process, not least because of US sanctions against crypto anonymisation tool Tornado Cash, as well as fears that cryptocurrency is being used to evade sanctions imposed on Russia and even Hamas. However, a lawmaker in charge of discussions on the package in Parliament assured last year that the measures would not seek to ban privacy-enhancing crypto-currencies.
The industry body, the EU Crypto Initiative, urged lawmakers in May 2023 to remove planned restrictions on privacy-preserving tools or, failing that, include a “clear delineation between prohibited high-risk anonymous accounts and high-risk anonymisation tools”.
Conclusion
This new agreement is an integral part of the EU’s new anti-money laundering system. It will improve the operation and cooperation of national systems against money laundering and terrorist financing. All that remains is for the agreement to be formally adopted by the Parliament and the Council for it to enter into force.
This article reflects information reported by CoinDesk and demonstrates a watershed moment in cryptocurrency regulation within the EU, highlighting the importance of security and transparency in the digital asset industry.
