EU mulls new ‘Anti-Money Laundering Authority’

  • EU institutions still have a long way to go to negotiate details before new rules come into force
  • EU Has Already Approved Crypto Asset Markets (MiCAs) and Remittances Regulation

Sooner or later, a new regulator will emerge in the European Union (EU) to oversee anti-money laundering rules, including crypto-assets. The 27 member states agreed on a “partial position” this summer to create a new EU anti-money laundering authority that would oversee crypto transactions.

The body will not only help combat money laundering in European financial markets, but will also receive new powers to directly supervise certain types of credit and financial institutions – including crypto-asset service providers – if they are considered too risky.

The position is “partial” because EU countries have not yet agreed on where the new authority will be based. If they follow the same procedures as other EU regulators, European countries and cities will have to compete for the new seat on their territory.

The so-called Anti-Money Laundering Authority (AMLA) “will enhance the effective functioning of the Union’s anti-money laundering and counter-terrorist financing (AML/CTF) framework”, according to the Council of the EU, the legislative arm of the governing body. A European-wide regulator could “make a strong and useful contribution” to the fight against money laundering and the financing of terrorism, given that it is generally a cross-border crime.

In addition, the AMLA “will contribute to the harmonization and coordination of supervisory practices in the financial and non-financial sectors, the direct supervision of high-risk and cross-border financial entities and the coordination of financial intelligence units” . However, this can take several years to be in place.

A long political road for AMLA

This legislation, which is the sixth update to the AML rules, was first introduced by the European Commission last year. Members of the European Parliament, who have generally taken a tough stance toward crypto regulation, still need to give the go-ahead before this new regulator can see the light of day. But there appears to be little disagreement over its existence, including digital asset authority, The Block reported.

This has been a very busy year for EU institutions when it comes to crypto regulation. Earlier this summer, there was an agreement on the Crypto Asset Markets (MiCA), as well as the remittance regulation. These two elements are the pillars of the future crypto regulation of the European single market.

Arguing that the EU is working to prevent criminals from circumventing anti-money laundering rules via cryptocurrencies, the EU Council and Parliament announced in June a provisional agreement to extend the scope rules to transfers of crypto assets, “making it more difficult for them to be misused for criminal purposes.

“The purpose of this overhaul is to introduce an obligation for crypto-asset service providers to collect and make accessible certain information on the senders and recipients of transfers”, explained the Council at the time, guaranteeing that this would ensure “the traceability of crypto-assets”. asset transfers in order to better identify possible suspicious transactions and block them.

According to the European Parliament, this agreement also covers transactions of so-called non-hosted wallets, which are in the custody of a private user, when interacting with hosted wallets managed by crypto-asset service providers. Currently, the Parliament, the Council and the Commission are working on the technical aspects of these legislative texts. They must be approved by the plenary before entering into force.

In the absence of better privacy tools, critics warn that overzealous regulation of public blockchains could open the door to a regime of financial surveillance, negatively affecting the freedom of citizens.

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  • Tiago Varzim


    Freelance journalist

    Tiago Varzim is a Portugal-based journalist covering macroeconomics, financial markets and digital assets in the European Union. He works for the main financial newspapers in Portugal. Tiago graduated from the Escola Superior de Comunicação Social in Lisbon with a degree in journalism.

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