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EU wants anti-money laundering regulator to monitor crypto

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Due to fresh concerns over money laundering in the space, the European Union (EU) is aiming to bolster its oversight of the cryptocurrency industry by providing its new anti-money laundering watchdog with greater powers. 

New regulator will oversee AML efforts

The 27-country organization is aiming to include cryptocurrency firms within the purview of its anti-money laundering watchdog. Currently, the European Commission is responsible for establishing the scope and design of the new watchdog, which is set to launch in 2024.

When operational, the new watchdog will be tasked with overseeing banks, financial institutions, and crypto-asset related firms. At present, reports suggest that Germany has pushed to implement oversight of cryptocurrency companies alongside Spain, Austria, Italy, Luxembourg, and The Netherlands. 

If the new watchdog does take responsibility for monitoring anti-money laundering efforts, then it will streamline the process. At the moment, anti-money laundering efforts in Europe are carried out by several authorities across various nations in the European Union bloc, meaning that there is often difficulty in coordinating efforts.

Proposals may change before 2024

Since its initial proposal about anti-money laundering regulations was released in July 2021, the European Commission has increasingly focused on the link between cryptocurrencies and money laundering.

However, although EU lawmakers believe that crypto is “one of the fields more prone to money laundering activities”, it’s unclear to what extent EU member states will support changes to the proposals and whether the European Parliament will ask for changes to the final version of the text. As a result, by the time the new watchdog launches in 2024, its role and focus may change.

Increased regulation part of a wider trend

The European Union’s harsher stance towards cryptocurrency is part of a wider trend in anti-money laundering regulations. Now, regulators are regularly stating that cryptocurrencies provide a safe haven for criminals, and multiple banks have pushed for cryptocurrencies to be banned entirely. Similarly, a recent report from Chainalysis showed that crypto-related crime hit an all-time high of $14 billion in 2021.

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