In a significant move to bolster Anti-Money Laundering (AML) efforts, the European Banking Authority (EBA) has announced the expansion of Travel Rules guidelines to encompass crypto service providers and their intermediaries.
Starting from December 30, crypto exchanges operating within the European Union (EU) will be obligated to comply with Regulation (EU) 2023/1113 (Travel Rule Guidelines), which mandates the reporting of information on fund and crypto asset transfers. Notably, crypto-asset service providers (CASPs), as defined in the Markets in Crypto-Assets (MiCA) regulations, will be brought within the scope of the EU’s Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) framework.
On the other end, crypto exchanges and service providers already subject to the EU’s Anti-Money Laundering Directive (AMLD) or domestic AML/CFT regimes will continue to adhere to the relevant AML/CFT requirements
Once the regulation comes into effect, payment service providers (PSPs), intermediary PSPs, CASPs, and intermediary CASPs will have a two-month grace period to align with the new requirements.
“The deadline for competent authorities to report whether they comply with the Guidelines will be two months after the publication of the translations,”
Some of the key provisions of these Travel Rule Guidelines include collecting user information for fund or crypto-asset transfers, identifying transactions linked to the purchase of services and detecting suspicious transfer patterns. Additionally, crypto service providers and intermediaries must declare their policies on multi-intermediation and cross-border transfers.
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While the EBA acknowledges that complying with these guidelines may impose financial strain on crypto exchanges and service providers, it emphasizes the anticipated long-term benefits.
“Overall, the benefits from these Guidelines are expected to outweigh potential costs, and these Guidelines are expected to contribute to making the fight against ML/TF more effective,”
the agency noted.
Meanwhile, this regulatory expansion aligns with the EBA’s objective of harmonizing AML efforts across digital assets. The agency had earlier announced in January 2024 that by extending the scope of existing regulations to include digital assets, the EBA aims to “harmonize the approach,” requiring cryptocurrency asset service providers (CASPs) throughout the European Union to combat various forms of financial crime.
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