· The European Banking Authority (EBA) seeks feedback on proposed amendments to combat crypto-money laundering.
· Crypto Asset Service Providers (CASPs) face significant money laundering and terrorist financing risks.
Other countries, such as Japan and the United States, are also stepping up efforts to combat cryptocurrency money laundering.
The European Banking Authority (EBA) is seeking public comments on proposed amendments to its anti-crypto money laundering guidelines, with a focus on including crypto asset service providers (CASPs).
The EBA has launched a public consultation to gather feedback on proposed amendments to its Money Laundering and Terrorist Financing (ML/TF) Risk Factor Guidance, the news is part of the latest EU effort to strengthen defenses against cryptocurrency crime.
Strengthen Anti-Crypto Money Laundering Rules
The main objective of these changes is to bring crypto asset service providers within the scope of the guidelines, and stakeholders and interested parties must engage in a consultation process by August 31, 2023.
The European Union defines CASP as a legal entity or individual that provides crypto-fiat currency exchange, currency-to-currency exchange, custody services, operates a trading platform, participates in the issuance of encrypted assets, or provides financial services related to encrypted assets.
CASPs and other credit and financial institutions face significant ML/TF risks. However, the ease of transfer and enhanced privacy of cryptocurrencies pose unique challenges.
Money laundering in Belgium, Luxembourg and the Netherlands. Source: Statista
The EBA intends to revise the ML/TF risk factor guidelines to establish uniform regulations for CASP. These expectations will detail steps for CASP to effectively identify and mitigate ML/TF risks.
The proposed changes include specific guidance for CASPs to help them understand and address ML/TF risks. The EBA advises CASPs to assess these risks on an ongoing basis during their business relationship and to adapt their customer due diligence as appropriate.
The amendments also provide guidance for other credit and financial institutions regarding the risks when working with CASPs or when exposed to crypto assets.
In addition, the EBA is developing additional guidance for AML/CFT regulators of CASPs, which will be included in the revised risk-based regulatory guidance. These amendments will be open for comment until June 29, 2023.
Interested parties can submit their opinions and participate in the consultation through the consultation page of EBA before August 31, 2023.
Japan and the United States step up anti-money laundering efforts
The EU isn't the only country stepping up its efforts. Money laundering and terrorism financing have long been a concern for governments regulating cryptocurrencies.
However, this year has been the most active year for cryptocurrency regulation, and the battle has intensified. Recently, the Japanese government announced the strengthening of anti-money laundering procedures.
The U.S. Department of Justice’s National Cryptocurrency Enforcement Team is also ramping up its anti-money laundering efforts. Federal agents want to crack down on cryptocurrency mixers, mixers and exchanges that violate money laundering regulations.
In April, the U.S. government identified decentralized finance (DeFi) as a way for criminals to launder and obtain funds.
Cryptocurrencies for money laundering. Source: Chainalysis
According to Chainalysis, in 2022, illicit addresses moved about $23.8 billion worth of cryptocurrencies, an increase of 68.0% compared to the previous year.
It’s worth noting that mainstream centralized exchanges account for the lion’s share, accounting for nearly half of funds of illicit origin.
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European Banking Authority steps up fight against cryptocurrency money laundering
This article briefly:
· The European Banking Authority (EBA) seeks feedback on proposed amendments to combat crypto-money laundering.
· Crypto Asset Service Providers (CASPs) face significant money laundering and terrorist financing risks.
Other countries, such as Japan and the United States, are also stepping up efforts to combat cryptocurrency money laundering.
The European Banking Authority (EBA) is seeking public comments on proposed amendments to its anti-crypto money laundering guidelines, with a focus on including crypto asset service providers (CASPs).
The EBA has launched a public consultation to gather feedback on proposed amendments to its Money Laundering and Terrorist Financing (ML/TF) Risk Factor Guidance, the news is part of the latest EU effort to strengthen defenses against cryptocurrency crime.
Strengthen Anti-Crypto Money Laundering Rules
The main objective of these changes is to bring crypto asset service providers within the scope of the guidelines, and stakeholders and interested parties must engage in a consultation process by August 31, 2023.
The European Union defines CASP as a legal entity or individual that provides crypto-fiat currency exchange, currency-to-currency exchange, custody services, operates a trading platform, participates in the issuance of encrypted assets, or provides financial services related to encrypted assets.
CASPs and other credit and financial institutions face significant ML/TF risks. However, the ease of transfer and enhanced privacy of cryptocurrencies pose unique challenges.
Money laundering in Belgium, Luxembourg and the Netherlands. Source: Statista
The EBA intends to revise the ML/TF risk factor guidelines to establish uniform regulations for CASP. These expectations will detail steps for CASP to effectively identify and mitigate ML/TF risks.
The proposed changes include specific guidance for CASPs to help them understand and address ML/TF risks. The EBA advises CASPs to assess these risks on an ongoing basis during their business relationship and to adapt their customer due diligence as appropriate.
The amendments also provide guidance for other credit and financial institutions regarding the risks when working with CASPs or when exposed to crypto assets.
Anti-Money Laundering Software Market. Source: Statista
In addition, the EBA is developing additional guidance for AML/CFT regulators of CASPs, which will be included in the revised risk-based regulatory guidance. These amendments will be open for comment until June 29, 2023.
Interested parties can submit their opinions and participate in the consultation through the consultation page of EBA before August 31, 2023.
Japan and the United States step up anti-money laundering efforts
The EU isn't the only country stepping up its efforts. Money laundering and terrorism financing have long been a concern for governments regulating cryptocurrencies.
However, this year has been the most active year for cryptocurrency regulation, and the battle has intensified. Recently, the Japanese government announced the strengthening of anti-money laundering procedures.
The U.S. Department of Justice’s National Cryptocurrency Enforcement Team is also ramping up its anti-money laundering efforts. Federal agents want to crack down on cryptocurrency mixers, mixers and exchanges that violate money laundering regulations.
In April, the U.S. government identified decentralized finance (DeFi) as a way for criminals to launder and obtain funds.
Cryptocurrencies for money laundering. Source: Chainalysis
According to Chainalysis, in 2022, illicit addresses moved about $23.8 billion worth of cryptocurrencies, an increase of 68.0% compared to the previous year.
It’s worth noting that mainstream centralized exchanges account for the lion’s share, accounting for nearly half of funds of illicit origin.