EU authorities extend anti-money laundering guidance for crypto companies

Anti-money laundering guidance: The European Union's Anti-Money Laundering and Counter-Terrorist Financing guidelines have recently been extended to encompass European cryptocurrency companies, as confirmed by the European Banking Authority (EBA) on January 16. The amended guidelines, effective from December 30, 2023, aim to assist crypto asset service providers (CASPs) in identifying their exposure to financial crimes concerning customers, products, delivery channels, and geographical locations.

The EBA underlined the importance of these adjustments as a significant stride in the EU's ongoing efforts to combat financial crime. The harmonisation of approaches across the union is expected to enhance measures against money laundering and terrorist financing within the crypto sector.

In response to the updated guidelines, crypto firms are urged to adapt their financial crime-fighting measures. This may involve using blockchain analytics tools, as outlined by the EBA. Moreover, the guidelines specifically address risks associated with cryptocurrency and provide guidance for financial institutions holding or serving crypto firms.

The regulatory framework also includes a comprehensive financial crime risk assessment, prompting crypto firms to consider potential risks related to anonymity-enhancing features, self-hosted wallets, decentralized platforms, and products facilitating transfers between the company and such services.

These developments follow the EU's finalization of the Transfer of Funds Regulation (ToFR) governing crypto transfers and the adoption of the Markets in Crypto-Assets (MiCA) regulations in 2023. The investor protections outlined in MiCA are slated to take effect in December, with EU member states having the option to implement an 18-month transitional period for CASPs, allowing them to operate without a license during this time.