EU Strengthens Anti-Money Laundering Measures, Tightening Oversight on Cryptocurrency Transactions

The European Union Parliament and Council have recently reached a provisional agreement on an array of anti-money laundering (AML) and anti-terrorist financing laws. While further discussions on additional proposed measures are pending, these new regulations aim to enhance collaboration among the national financial agencies of EU member countries to combat financial crimes.

Although cryptocurrencies are not the primary focus of these regulations, certain provisions explicitly target the crypto industry.

Increased Scrutiny on Crypto Earnings

In response to the growing trend of crypto companies relocating activities to the EU for a more defined regulatory framework, the new laws address the need to prevent financial crimes both within and beyond Europe.

One notable provision requires crypto companies to conduct due diligence for any digital asset transaction exceeding 1,000 EUR. Similar requirements are extended to traders of luxury goods, football clubs, and agents.

Enhanced Due Diligence Procedures

The regulations introduce stringent due diligence procedures for individuals with high net worth, mandating identity verification for cash transactions ranging from 3,000 to 10,000 EUR. Similar verification protocols apply to transfers involving "high-risk third countries" lacking adequate legislation on terrorism and financial crimes.

Centralized Information Gathering at EU Level

Moving forward, each EU country's financial intelligence units (FIUs) will have "immediate and direct" access to comprehensive information, financial or otherwise, related to these measures. While local FIUs retain the authority to act on this intelligence, they will share pertinent information with European authorities, enhancing the prevention of transnational financial crimes.