The European Parliament has passed a new bill, which includes a set of rules for due diligence of crypto companies to prevent money laundering.
How does the newly passed EU anti-money laundering law affect the crypto industry?
On April 24, the European Parliament voted to pass a bill strengthening due diligence measures and identity verification of customers, including crypto companies. Under this new law, businesses are obliged to report suspicious activities related to money laundering to the government.
The bill passed by the European Parliament would force companies offering cryptocurrency services to collect more data on users and their transactions, raising the bar for oversight of non- custodial wallets. Non-Custodial) and prohibit anonymity-enhancing tools such as coin mixers and anonymous Token .
The bill is in its final steps before becoming official law. Mr. Patrick Hansen, Circle's Director of EU Policy and Strategy, said: "The bill will be officially approved by the EU Council and take effect after 3 years."
🇪🇺 Update: As expected (see tweet #18 of the thread below), the EU Parliament plenary passed the new AML package, including the AML Regulation with 479 votes in favor, 61 against, and 32 abstentions. The package will now be formally adopted by the Council of the EU as well and… https://t.co/BtubbC2u5A
— Patrick Hansen (@paddi_hansen) April 24, 2024
“Companies providing cryptocurrency services need to follow standard KYC/AML processes such as customer due diligence,” Mr. Hansen said in the post. This is nothing new as all cryptocurrency exchange and custodial wallet service providers in the EU are subject to these obligations under the current US anti-money laundering directive AMLD5.”
“Previous drafts of the anti-money laundering law proposed a stricter approach, requiring KYC for originators or users of self-custody wallets. Thanks to industry efforts, the approach to multiple risk options is finally unified. Overall, the final version of the bill is a great outcome for the cryptocurrency industry,” Hansen Chia .
Marina Markevic, CEO of the European Cryptocurrency Initiative trade association, said KYC processes could add burden to users instead of encouraging them to use blockchain technology. For cryptocurrency transfers under 1,000 euros, the service provider needs to perform basic KYC to identify their users. For transactions larger than 1,000 euros, customer due diligence measures will be applied, tracking user behavior and identity based on more permanent KYC.
Reportedly, this law will not affect service providers that are developing software for purely technological non-custodial wallets, such as MetaMask .
Last month, Mr. Hansen denied rumors that the new law would ban anonymous crypto wallets from trading from self-custody wallets. The EU anti-money laundering law also imposes regulations on cryptocurrency service providers similar to the agency's MiCA (Markets for Crypto Assets Bill).
While it does not ban anonymous crypto wallets, the bill does ban tools that enable anonymity, including the listing of Token like Monero and Zcash. This also applies to coin mixing tools, which are frequently used by hackers to disperse assets after cyber attacks in the cryptocurrency industry.
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