The European Union (EU) has taken a significant step towards tackling money laundering and terrorist financing by passing new measures to regulate digital assets.
In a joint vote, the European Parliament and other Economics and Civil Liberties committees lawmakers approved the new Anti-Money Laundering (AML) and terrorist financing regulations on March 28.
The new measures require entities such as banks, assets and crypto asset managers, real and virtual estate agents, and high-level professional football clubs to verify their customers’ identity, establish detailed types of risk of money laundering and terrorist financing in their sector of activity, and transmit the relevant information to a central register.
One key aspect of the new law is imposing a €1000 limit on crypto users with unverified identities.
The regulation also limits cash payments for transactions in the same category of unverified crypto users to €7000. The limits are part of the EU’s plan to revamp its AML regulations and prevent businesses from accepting large payments from anonymous sources.
According to Damien Carême, the French lawmaker leading the parliament’s negotiations on revamping its AML regulations, the law is not intended to ban crypto payments but to target money laundering.
The limit cap only applies to unregulated wallets and unverified users. In addition, the new regulations come alongside measures that restrict businesses from accepting large payments from anonymous sources.
The European Parliament also voted to create a new European Union Anti-Money Laundering Agency (AMLA). That agency is permitted supervisory and investigative powers “to ensure compliance with AML/CFT requirements.”
The AMLA will monitor risks and threats within and outside the EU. It will directly supervise specific credit and financial institutions and classify them according to risk level.
The MEPs are looking to grant the AMLA the authority to mediate between national financial supervisors and the settlement of disputes. The AMLA will also receive whistleblower complaints and ensure more robust oversight of the supervisors in the non-financial sector.
The new measures are an essential step towards regulating the use of digital assets in the EU and preventing money laundering and terrorist financing. While the regulations do not ban crypto payments, they impose strict limits on unverified users and wallets. In addition, businesses will be required to verify their customers’ identities and transmit relevant information to a central register.
The creation of the AMLA will provide strong oversight and enforcement of the new regulations, ensuring that they effectively prevent illicit activities.
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