This week the EU passed a broad set of Anti-Money Laundering Regulations (AMLR), which enforce stricter rules for Know Your Customer (KYC) processes at financial institutions. These aim to protect against money laundering and the financing of sanctioned individuals and organisations.
Crypto Asset Service Providers (CASPs) are included in the AMLR, and will be obligated to verify the identity of all customers, store data on cross border transactions, and report suspicious activity to the relevant authorities.
Although the EU’s AMLR isn’t new to the financial industry, this latest update clarifies the requirements for CASPs. This presents a particular challenge for the cryptocurrency industry who’ll have to deliver more rigorous compliance standards when verifying customers and their payment beneficiaries. Sumsub’s research shows that in 2023:
- 88% of all financial fraud cases targeted cryptocurrency.
- Deepfakes attempts in the crypto sector increased by 128%.
- 70% of crypto companies reported a rise in deepfake fraud.
Cryptocurrency faces the lion’s share of financial fraud, where users attempt to fool CASPs with fake identities to avoid detection, according to findings from leading transaction monitoring and verification platform Sumsub.
Ilya Brovin, Chief Growth Officer at Sumsub, comments: “The EU’s latest AMLR regulations are a welcome response to the advantages that technology is gifting criminals. It takes us a step closer to the safe and transparent crypto industry we all want, which is to be celebrated.
“Businesses are facing a rising regulatory tide where properly preparing for compliance is crucial. There is now a simple choice, whether to implement solutions that can deliver this, or instead risk significant financial and reputational damages. These solutions should also be able to determine the recipient CASP, carry out counterparty due diligence, and screen for sanction breaches. The onus is also on crypto platforms to pay attention to whether the Travel Rule solution provider can ensure data protection during transmission.”
