The European Union is taking steps to combat money laundering by introducing new legislation to trace and identify cryptoasset transfers. Members of the European Parliament (MEP) have recently adopted draft legislation strengthening EU rules against money laundering and terrorist financing. The proposed legislation is set to be negotiated with EU governments with a vote scheduled for the parliament’s plenary session in April 2023.
With the increasing use of cryptocurrencies, the need for regulations to combat financial crimes has become even more critical. The draft legislation will require cryptoasset transfers to include information on their source and the beneficiary, much like traditional money transfers. The rules will also mandate crypto exchanges to verify the source of the assets and ensure that there are no risks of money laundering or terrorism financing before making the cryptoasset available to the beneficiaries.
The European Parliament believes that technology should be used to ensure that asset transfers can be individually identified. Moreover, MEPs have decided to remove minimum thresholds and exemptions for low-value transfers, thereby making it compulsory for all cryptoasset transfers to comply with the proposed regulations.
Rudi Kesic, an AML expert and CEO at Verify 365, comments: “The proposed regulations will be a significant step in combating money laundering and terrorist financing. The use of technology such as Verify 365 to identify cryptoasset transfers and removing minimum thresholds for low-value transfers will make it easier to monitor and identify any suspicious activities.”
The new rules will not apply to person-to-person transfers or among exchanges and providers acting on their own behalf.
Additionally, MEPs want the European Banking Authority (EBA) to establish a public register of crypto firms that may pose high risks of money laundering, terrorist financing, and other criminal activities.
Ernest Urtasun MEP, the lead negotiator of the draft legislation, says, “Criminals thrive where rules allowing for confidentiality allow for secrecy and anonymity. With this proposal for a regulation, the EU will close this loophole.”
The proposed regulations will serve as a significant step forward in regulating cryptoasset transfers and fighting against money laundering and terrorist financing.
