EU Implements Stricter Anti-Money Laundering Regulations for Cryptocurrency Companies to Combat Illicit Conduct
The European Union’s banking watchdog has taken a significant step towards combating financial crimes in the cryptocurrency sector. The European Banking Authority (EBA) has released new guidelines that require crypto firms to adhere to strict measures against money laundering and terrorist financing.
The EBA’s recent guidelines aim to integrate crypto firms into the European framework for financial oversight. By expanding the scope of existing anti-money laundering and counter-terrorist financing measures to include the crypto sector, the EBA aims to ensure that crypto asset service providers (CASPs) across the EU address the risks associated with financial crimes. These guidelines were prompted by the increasing use of cryptocurrencies in illegal activities.
According to a press release from the EBA, the risks of financial crimes in the crypto sector are heightened due to the speed of crypto-asset transfers and the anonymity features of certain products. Therefore, it is crucial for CASPs to be aware of these risks and implement effective measures to mitigate them.
Last year, the EU finalized legislation on the transfer of funds using digital assets and introduced the comprehensive Markets in Crypto Assets (MiCA) regulatory package. Under these regulations, companies that wish to issue, trade, and secure cryptoassets, tokenized assets, and stablecoins within the EU must obtain a license.
To combat tax evasion and the potential misuse of cryptoasset transfers for money laundering, ministers have implemented measures to make transactions more traceable. Starting from January 2026, service providers will be required to collect the names of both senders and beneficiaries for all cryptoasset transactions, regardless of the transfer amount.
The EBA has been actively publishing guidelines for the risk-based supervision of CASPs and seeking input on proposals based on recommendations from the Financial Action Task Force (FATF), the global financial watchdog. These consultations also cover guidance on internal policies and control measures that CASPs should implement, with the aim of creating a secure crypto environment.
The recent guidelines also have implications for credit and financial institutions that deal with CASPs and crypto assets. Compliance reports must be submitted within two months of the translation of the guidelines, and implementation is set for December 30. This move by the EBA enhances the security of the crypto market, promotes transparency, and addresses the skepticism of traditional financial institutions.
The EBA stated, “Given the interconnectedness of the financial sector, the new Guidelines also include guidance for other credit and financial institutions that have CASPs as their customers or are exposed to crypto assets.”
In October 2023, the European Union introduced DAC8, a directive aimed at improving tax cooperation rules. This directive requires crypto-asset service providers (CASPs) to disclose transaction details of their clients to tax authorities, with a focus on reporting crypto transactions involving high-net-worth individuals.