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Resourceslibrarykyc newsEU reaches provisional agreement on transparency of crypto asset transfers

EU reaches provisional agreement on transparency of crypto asset transfers

By introducing the so-called ‘travel rule’, the EU aims to ensure financial transparency on exchanges involving crypto assets. The rule will also provide the EU with a framework that will comply with recommendations 15 and 16 of the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog.

July 26, 2022
KYC News
Crypto
Analysis
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The EU is making it more difficult for criminals to use cryptocurrencies for money laundering and other criminal purposes. 

Negotiators from the council presidency and the European Parliament have reached a provisional agreement on updating the rules on information accompanying the transfers of funds. In doing so, they are extending the scope of those rules to include crypto assets.

EU ensures compliance with FATF standards

By introducing the so-called ‘travel rule’, the EU aims to ensure financial transparency on exchanges involving crypto assets. The rule will also provide the EU with a framework that will comply with recommendations 15 and 16 of the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog.

Overall, the EU is extending the scope of existing rules to include an obligation for crypto asset service providers to collect and make available certain information about the originator and the beneficiary of the transfers of crypto assets. In doing so, the EU is aiming to ensure the traceability of crypto asset transfers. This way, they can better identify suspicious transactions and block them.

What will the new rules achieve?

The new agreement will enable the EU to deal with the risks of money laundering and terrorist financing linked to these new technologies.

It’s hoped that by improving the traceability of transfers of crypto assets, the EU can make it much more difficult for people and entities to circumvent restrictive measures.

To assist with this aim, crypto asset service providers must now implement appropriate internal policies, procedures and controls to mitigate the risks of evasion of national and EU restrictive measures. All sanctions already apply to natural and legal persons, including those operating in the crypto currencies sector.

In the coming months, the EU also says that its member states will need to ensure that all crypto asset service providers qualify as obliged entities under the 4th AML directive. Once this has taken place, the EU will align with FATF recommendations. Such a move will also level the playing field between member states who had adopted different approaches until this point.

As part of the new rules, co-legislators agreed on the urgency to ensure traceability of crypto asset transfers. Due to this, they have chosen to align the timetable for application of this regulation with that of the markets in crypto assets (MiCA) regulation.

Ensure compliance with Veriff

Particularly in the crypto space, criminals and bad actors are finding increasingly sophisticated ways to target businesses and customers alike. Due to this, the AML and CFT regulations are continually changing and evolving.

To ensure your company stays compliant with these ever-changing regulations, enlist the help of our crypto identity verification solution. By doing so, you can keep users happy by providing a seamless onboarding process while also satisfying FINRA, SEC, and GDPR requirements, as well as enforcing AMLD6 guidelines.

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