The proposed amendments aim to strengthen the AML/CFT framework in the European Union (“EU”) by:
- Expanding the scope of the guidance to include crypto-asset service providers (“CASPs”).
- Clarifying the responsibilities of CASPs and other financial institutions to prevent money laundering and terrorist financing.
- Providing guidance on how to implement the EU's AML/CFT rules.
According to the EBA update, CASPs are increasingly being used to facilitate money laundering. The EBA update also mentions that the current AML/CFT framework does not adequately address the risks posed by CASPs. The reason for that is because the framework was designed for traditional financial institutions, and it does not consider the unique features of CASPs.
CASPs features/Risks and proposed amendments:
|
Feature |
Description |
Risk |
Proposed Amendment |
|
Anonymity |
CASPs often allow users to remain anonymous, which makes it difficult to track the movement of funds. |
Criminals can use CASPs to launder money without being detected. |
Require CASPs to identify and verify their customers. |
|
Cross-border transfers |
CASPs allow users to make cross-border transfers, which makes it difficult for law enforcement to investigate money laundering cases. |
Criminals can use CASPs to launder money across borders without being detected |
Require CASPs to monitor transactions for suspicious activity. |
|
Speed |
CASP transactions can be processed quickly, making it difficult for law enforcement to freeze assets. |
Criminals can use CASPs to launder money quickly and easily. |
Require CASPs to have a risk-based approach to AML/CFT. |
Purpose of the Consultation
The purpose of the consultation is to gather feedback on the proposed amendments to the EBA's guidance on AML/CFT. The EBA will use this feedback to inform its final decision on the amendments.
Comments can be submitted via the EBA's website. The deadline for submitting comments is August 31, 2023. The consultation is open to all interested parties, including financial institutions, CASPs, law enforcement agencies and other stakeholders.
How Apex Group Can Help
We can help you stay compliant with the latest regulations and protect your business from financial crime.
- Crypto/Virtual asset/VASP-CASP licensing
- Crypto-assets Due Diligence services
- Crypto AML compliance support
- Crypto Compliance Training
