The European Parliament has approved new Anti-Money Laundering Regulations (AMLR), which will require Crypto Asset Service Providers (CASP) in Europe to implement stringent Know Your Customer (KYC) procedures to combat money laundering. The regulations mandate enhanced due diligence measures and identity checks for obliged entities, such as banks, asset managers, and crypto asset managers. Suspicious activities must be reported to Financial Intelligence Units (FIUs) and other competent authorities.
The AMLR also encompasses non-financial sectors at risk for money laundering, including gambling and sports clubs. A new regulatory body called the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) will oversee compliance with the updated protocols.
The legislation significantly impacts centralized exchanges under the EU’s Markets in Crypto Assets (MiCA) umbrella, providing regulatory clarity for the growing crypto industry. MiCA, enacted in June 2023, is set to be enforceable by the end of this year.
Following the EU Parliament’s approval, Patrick Hansen, the EU Strategy and Policy Director for Circle, noted that the outcome of the vote was expected. The new regulations largely mirror existing anti-money laundering laws, including provisions from the MiCA regulation and the Transfer of Fund Regulation (TFR).
Initial proposals that posed a threat to the crypto sector, such as capping self-custody payments and subjecting decentralized autonomous organizations (DAOs) and non-fungible token (NFT) platforms to AMLR obligations, were scaled back.
The regulations are set to be formally adopted by the Council of the EU and will enter into application three years later. The development represents a significant step in combating money laundering and ensuring regulatory compliance in the European crypto industry.
