By
Godfrey Benjamin
April 16th, 2024
No matter how urgent and effective the proposals are, it would still take a couple of years for them to become legally binding. EU States and the European Parliament will give the final decision on the proposals.
European Commission proposes to extend ‘Travel Rule’ to crypto transactions to prevent and detect their use for money laundering and terrorist financing.
To monitor the growing use of virtual currency like Bitcoin by organized crime units as well as terrorist organizations, the executive arm of the EU has proposed stricter rules. The ‘Travel Rule’ will make it compulsory for crypto service providers to collect crucial information like the customer’s name, address and account details. This will result in immediate confiscation of anonymous crypto asset wallets thus keeping them out of the EU financial system. This preventive rule is one of the many recommendations of the Financial Action Task Force, an intergovernmental entity that was established to design policies to combat money laundering.
The ‘Travel Rule’ already applies to wire transfers in the EU which bans anonymous bank accounts. The region has some of the best anti-money laundering policies and an update to their already competent rules will mean that the crackdown on illicit transfers and payments will be a huge blow to the crime world. These rules are part of the wider legislative proposals package that the European Commission presented Tuesday.
Highlights of the New Anti-Money Laundering Package by the European Commission
This comprehensive package aims to further develop the existing rules that will make the detection of suspicious financial activity more advanced and close existing loopholes exploited by the criminals and terrorists for money laundering.
The update will make compliance a breeze for existing parties subject to the EU’s AML/CFT rules.
The package makes a total of 4 legislative proposals namely:
- A New EU AML/CFT Authority
- New AML Regulations with directly applicable rules
- The Sixth Directive (AMLD6) with provisions that will likely get transposed into national law
- Revision of Regulation 2015/847/EU related to the Transfers of Funds to trace transfers of crypto-assets
One of the proposals directly targets the cash payment method used by criminals around the world. It proposes to put a limit of €10,000 on large cash payments.
Custom Measures for Countries listed by the FATF will make sure that the EU adopts measures in the context of the threats posed by the country.
What do These Crypto Regulations Mean for the Wider Crypto World?
The major benefit of these new rules would be the complete traceability of all crypto asset transactions like that for Bitcoin. This would mean that the information pertaining to all participants in the transaction will help the police track the illegal entities in the system thereby making the crypto route troublesome for the criminals. The ban on unidentified crypto wallet holders under these anti-money laundering regulations will nip the illegal crypto activity in the bud.
The European Commission considers these proposals to provide an equilibrium between addressing these financial threats and conforming to international standards while preventing extreme regulatory burden on the crypto industry. Also, they are positive these measures would create a harmonized legal framework that would eventually support and develop the EU’s crypto industry.
No matter how urgent and effective the proposals are, it would still take a couple of years for them to become legally binding. EU States and the European Parliament will give the final decision on the proposals.