The new legal regulations would affect cryptoasset service providers centered around the exchanges under the EU framework. The European Parliament has adopted new regulations establishing rigorous due diligence obligations for cryptocurrency entities to suppress money laundering.
Crackdown on crypto money laundering
The law provides new activities focused on the role of “due diligence measures and identity checks,” it extends to entities that carry out services, such as crypto asset managers. They will also have to notify authorities of any suspicious enterprises that could be linked to this kind of fraud.
The aspect of the new law, which was approved on April 24th, is expected to have an impact on crypto-asset service providers (CASPs) like the centralized crypto exchanges under MiCA regulation and wide companies and organizations, which among them are digital games services. MiCA is a European Union legal framework representing the security of digital assets and their markets. It is scheduled to come into force in June 2023 and will be enforced fully by the end of the year. A newly created platform, the Office of Anti-Money Laundering and Combating Financial Terrorism (AMLA), has been entrusted with monitoring and helping apply the instrument.
EU rules for crypto firms
Frankfurt, Germany, is the domicile of AMLA’s head office. Nevertheless, the law has been debated in the Council but has not yet been applied and hence has not appeared in the EU official journal. Hon Patrick Hansen, EU strategy and policy director at Circle, writes on X that the vote he anticipates will pass will have to follow that the Council makes official adoption of the package along with it comes into effect in three years. Furthermore, he mentioned that the CASPs will be obliged to subscribe to the rules such as customer identity checks and anti-money laundering in terms of the Know Your Customer (KYC).
This is not the first time an exchange or a custodial wallet provider in the EU has been called to do so, as they’ve already had to keep this under their control. Hansen indicated changes to the document as a “positive result” for the crypto business industry. He drew attention to the fact that in the first version of the draft law of AMLR, a very strict regime was envisioned, which would have become valid not only for a legal entity/founder/beneficiary but also for carrying out the related operations.
On the other hand, he appreciated the input of the associated industries, which created diversity and multiple options and thereby achieved consensus. In recent months, most of the lead committees in the European Parliament have ruled that the limit for payments made from crypto wallets self-hosted is no longer the limit. These are the new laws about money laundering and financing terrorism.
