EU's Anti Money Laundering Package: Impact on Crypto Firms' Due Diligence

The EU Council and Parliament have reached a provisional agreement on aspects of an anti-money laundering (AML) package that will impact the crypto sector. This agreement will enforce stricter due diligence requirements on crypto firms, aiming to enhance transparency and combat illicit financial activities. Here are the key points of the provisional agreement:

Stricter Due Diligence Requirements

• Crypto asset service providers (CASPs) will need to conduct due diligence on customers involved in transactions of €1,000 or more.
• Enhanced due diligence will be required for cross-border correspondent relationships to mitigate risks.
• Businesses must identify and verify individuals conducting occasional cash transactions between €3,000 and €10,000.

Measures to Mitigate Risks

• The rules will address risks related to transactions with self-hosted wallets.
• An EU-wide maximum limit of €10,000 for cash payments aims to deter money laundering activities.

This provisional agreement is part of the EU's sixth Anti Money Laundering directive and the EU single rulebook regulation. Lead MEP Luděk Niedermayer highlighted the importance of closing existing loopholes and ensuring quick and effective data processing in the digital age. If approved by the European Parliament, these rules will be formally adopted and published in the EU's Official Journal. The ongoing efforts to regulate the crypto sector, including the recent Markets in Crypto Assets (MiCA) legislation, demonstrate the EU's commitment to establishing a unified regulatory framework across its member states.