On Tuesday, January 16, the European Banking Authority (EBA) released additional regulations for crypto companies to comply with in order to meet its anti-money laundering and terrorist-financing requirements.
The agency noted in its press release that by extending the scope of its existing regulations to include digital assets, it “harmonizes the approach,” which requires that cryptocurrency asset service providers (CASPs) across the European Union should implement to tackle all sorts of financial crime.
According to the statement, increased risks of financial crimes arise from the instant nature or anonymity of crypto transactions. Thus, the agency believes that it is essential that crypto service providers are aware of the dangers and establish adequate safeguards that efficiently prevent them.
In 2023, the European Union concluded the Guidelines on the transfer of funds using cryptocurrency and other related virtual assets alongside its Markets in Crypto Assets (MiCA) regulatory package. Since then, the financial watchdog has released guidelines on risk-based supervision of CASPs and also referenced the proposed legislation to inhibit the abuse of virtual asset transfers that tally with recommendations from the worldwide financial watchdog, the Financial Action Task Force (TATF).
Interestingly, the EBA is also consulting on additional guidance regarding internal policies and controls attributed to crypto asset providers. The consultation, which runs till March 25, 2024, seeks to obtain the public’s input on two sets of guidelines on internal policies, procedures, and controls to ensure the implementation of restrictive measures from the EU’s new regulations.
The agency outlined specific aspects that might affect the European Union’s effectiveness in its restrictive measures. These include weaknesses in internal policies, control, and procedures that expose financial institutions to reputational and legal risks and the risk of considerable fines in situations of non-compliance.
The agency also noted that not only do these issues affect the effectiveness of the EU’s restrictions, but they also could result in possible circumvention of restrictive measures and impact the integrity and stability of the EU’s financial system.
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