European Banking Authority proposes overhaul of AML, CFT rules for crypto providers

In a consultation paper released on Nov. 24, the European Banking Authority (EBA), an EU agency tasked with implementing a standard set of rules to regulate banking across all EU countries, highlights that existing regulations governing Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) standards compliance for crypto providers are inadequate. 

The EBA has since invited interested parties to provide comments until Feb. 26.

The proposal, in effect

As stated in the Executive Summary, the paper comes as bid to enhance measures for detecting missing or incomplete information on the payer or payee; the EBA is suggesting the repeal of the 2017 Joint European Supervisory Authorities (ESAs) Guidelines under Article 25 of Regulation (EU) 2015/847. This move aims to streamline procedures and better manage fund transfers lacking essential information within the regulatory framework.

Worth noting is that in section four of the consultation paper, labeled “Preventing the Abuse of Funds and Certain Crypto-Assets Transfers,” Crypto Asset Service Providers (CASPs) will now be mandated to obtain and maintain information on self-hosted addresses. Furthermore, the rules require CASPs to ensure individual identification of crypto asset transfers and verify ownership or control of the address by the CASP customer.

These stipulations would come into effect when the transfer amount from a self-hosted account surpasses 1,000 euros, although the EBA does not specify whether this threshold is on a monthly, daily, or one-time basis.

Steps toward regulation

This news comes just two months after European lawmakers endorsed the DAC8 directive on Sept. 13, with 535 votes in favor, to empower tax authorities to oversee and regulate cryptocurrency transactions across the EU.

Together, this marks another step in providing comprehensive monitoring capabilities for transactions conducted by individuals and companies within the region, in what may be leading steps for the industry as a whole.