The European Union banking authority extends the anti-money laundering directive to crypto

The European Union's Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) directives have been extended to European crypto companies following a decision by the region's banking regulators.

The European Banking Authority (EBA) said the updated guidance on January 16 aims to help crypto asset service providers (CASPs) identify their vulnerability to financial crimes based on their customers, products, delivery channels and geographic locations.

The guidelines describe how crypto companies should adjust their financial crime prevention measures, which may include “the use of blockchain analytics tools.” The directive will be effective from December 30.

The EBA said the latest reforms are an important step forward in the EU's fight against financial crime and will “harmonise the approach” to crypto companies in the EU to combat money laundering and terrorist financing.

We've extended our guidance to #crypto-asset service providers (CASPs) on money laundering (ML) and terrorist financing (TF) risk factors.

Purpose: To help CASPs identify these risks by providing a list of non-compliant factors pic.twitter.com/jTeDNIhX9f

— European Union Banking Authority – EBA (@EBA_News) January 16, 2024

The updated guidance includes cryptocurrency and crypto company-specific risks and guidance for financial institutions that hold cryptocurrencies or serve crypto companies.

Financial Crime Risk Assessment guidance is included with crypto companies advising them to consider the potential risks associated with “identity-enhancing features,” self-hosted wallets, decentralized platforms, and products that allow transfers between the company and similar services.

Related: EU regulators to investigate banks' crypto exposure

Last year, the European Union finalized the Money Transfer Regulation (ToFR), which governs crypto transfers and general and broader crypto markets under the Regulation of Crypto-Assets (MiCA).

MiCA's crypto investor protections will come into force in December, but EU member states can optionally apply an 18-month transition period to CASP, allowing them to operate without a license.

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