EU expands AML regulation impacting cryptocurrency compliance

The European Parliament has voted to adopt a package of laws to strengthen the EU’s AML and terrorist financing toolkit, with a particular impact on the cryptocurrency industry.

The regulation reports to create enhanced due diligence measures and checks on customer’s identity. Obliged entities, such as banks or cryptocurrency asset managers, have to report any suspicious activities to Financial Intelligence Units (FIUs) or other competent authorities. This is an increased level of due diligence on the cryptocurrency industry.

FIUs have been given greater powers under this legislation to analyse and detect money laundering and terrorist financing, in addition to suspending suspicious transactions.

The Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) will be established in Frankfurt to supervise these new rules. The AMLA will supervise the “riskiest” financial entities, intervene in cases of supervisory failures, act as a central hub for supervisors and mediate disputes between them. AMLA will also supervise the implementation of targeted financial sanctions.

The package of laws consists of the sixth AML directive, the EU “single rulebook” regulation, and AMLA regulation.

These laws will also allow people with a “legitimate interest”, such as journalists, civil organisations, competent authorities, and supervisory bodies, will have “immediate, unfiltered, direct and free access” to beneficial ownership information. This is data held in national registries and interconnected at EU level going back at least five years.

This legislation also includes enhances vigilance provisions for ultra-rich individuals (total wealth worth at least €50,000,000, excluding their main residence), an EU-wide limit of EUR 10 000 on cash payments, except between private individuals in a non-professional context, and measures to ensure compliance with targeted financial sanctions and avoid sanctions being circumvented.

Top-tier football clubs will also have to verify their customers’ identities, monitor transactions, and report any suspicious transactions to FIUs for high-value transactions from 2029.

Ilya Brovin, chief growth officer at Sumsub, said: “The EU’s latest AMLR regulations are a welcome response to the advantages that technology is gifting criminals. It takes us a step closer to the safe and transparent crypto industry we all want, which is to be celebrated.”