The European Parliament recently passed new regulations that aim to impose formal due diligence requirements on crypto companies in order to combat money laundering.
During the session on Wednesday the European Parliament approved a set of legislative measures designed to strengthen “customer due diligence and identity verification procedures‘, which will cover entities such as crypto asset managers. These entities will also be required to report any suspicious activity to the appropriate authorities.
The scope of the new legislation extends to crypto-asset service providers (CASPs), including centralized cryptocurrency exchanges, along with a number of other entities such as gambling services, as previously reported by The Block.
Patrick Hansen, Director “EU strategy and policy” on Circle, awaited the outcome of the vote, noting that the next step involves formal adoption by the EU Council, with implementation planned three years after that.
🇪🇺 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
Responding to recent speculation, Hansen clarified that the new regulations do not imply a ban on anonymous crypto wallets or payments from self-custodial wallets.
Instead, the regulations primarily target CASPs, which are already regulated by MiCA (Markets in Crypto-Assets Regulation), a regulatory framework created by the European Union to oversee digital assets and their markets, which came into effect in June 2023 and will be fully implemented by the end of the year.
Hansen emphasized that these CASPs will be required to adhere to standard KYC/AML procedures, such as customer due diligence (CDD), which are consistent with existing obligations under the current AMLD5 regulations for all crypto exchanges and custodial providers. wallets operating in the EU.
Reflecting on the final version of the legislation, Hansen described it as a positive outcome for the crypto industry. He noted that earlier drafts proposed a significantly stricter approach, including KYC requirements for individuals/recipients using self-custodial wallets, but ultimately industry efforts have contributed to the adoption of a risk-based approach offering different options .
