EBA introduces anti-money laundering guidelines for crypto assets

The European Banking Authority (EBA) has taken a significant step in cryptocurrency regulation by including crypto-asset service providers (CASPs) in its anti-money laundering (AML) and counter-terrorist financing (CTF) guidelines.

This move reflects the European Union’s commitment to addressing the potential misuse of crypto-assets in illicit financial activities. It is also a response to recent EU laws, including the Markets in Crypto Assets (MiCA) regulation issued last year.

The MiCA rules require companies intending to issue, trade and safeguard cryptoassets, tokenized assets and stablecoins in the 27-country bloc to obtain a license. Finance ministers have implemented these measures to combat tax evasion and prevent potential misuse of crypto asset transfers for money laundering, enhancing transaction traceability.

Furthermore, starting from January 2026, service providers must collect the names of both senders and beneficiaries for crypto asset transactions, regardless of the transfer amount.

National regulators must confirm compliance with the new MiCA-related guidelines within two months of translations being published, likely by the end of 2024.

EBA’s approach to risk-free crypto transactions

The EBA’s guidelines specifically target crypto-asset risks, such as their rapid transfer capabilities and features that can anonymize users.

“CASPs can be abused for financial crime purposes, including ML and TF. The risks of this happening can be increased, for example, because of the speed of crypto-asset transfers or because some products contain features that hide the user’s identity,” said the EBA in a press release published on Tuesday.

CASPs are encouraged to adopt a comprehensive framework to identify and assess these risks, covering aspects such as their customer base, types of crypto products offered, delivery channels, and geographic operations locations. Identifying vulnerabilities in these areas is crucial for devising effective risk mitigation strategies.

To address these challenges, CASPs are recommended to incorporate blockchain analytics into their operations. This proactive approach aims to strengthen the defenses of CASPs against potential abuse for money laundering or terrorist financing.

Moreover, the EBA’s guidelines recognize the interconnected nature of the financial sector. Beyond CASPs, the guidelines extend to encompass other credit and financial institutions that have exposure to crypto-assets or engage with CASPs. Increased risk is noted when these institutions interact with non-authorized CASPs.

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