The Economic and Monetary Affairs and Civil Liberties, Justice and Home Affairs committees of the European Parliament have recently adopted a position on three draft legislation pieces in an effort to tackle anti-money laundering (AML), terrorist financing, and evasion of sanctions.
Stricter EU rules to close existing gaps in combating money laundering, terrorist financing and evasion of sanctions have been approved by Parliament's economic and monetary affairs and civil liberties, justice and home affairs committees. Press release: https://t.co/5MgjOFRtSl pic.twitter.com/qy0jJON0Gg
— European Parliament (@Europarl_EN) March 28, 2023
Among the measures being considered are stricter rules for crypto-assets, which have been identified as potential avenues for illicit activities.
The proposed EU “single rulebook” regulation includes provisions on conducting due diligence on customers, transparency of beneficial owners, and the use of anonymous instruments, such as crypto-assets.
To restrict transactions in cash and crypto-assets, MEPs have proposed capping payments that can be accepted by persons providing goods or services. Limits of €7,000 for cash payments and €1,000 for crypto-asset transfers have been set, where the customer cannot be identified.
These measures aim to reduce the risk of misuse by criminals in the rapidly growing digital currency space.
Out of the lawmakers voting on the issue, 99 supported the imposition of the $1,000 cap on anonymous crypto user payments, while eight voted against it.
Lead negotiator and French Green Party lawmaker, Damien Carême, clarified that the cap only applies to unregulated wallet providers and unverified wallets, which means that crypto payments are not prohibited.
“We are absolutely not preventing crypto transactions. It’s just when identification isn’t possible.”, Carême stated.
The new AML rules will also cover DAOs, NFT platforms, and DeFi platforms, requiring them to comply with AML regulations if they are “controlled directly or indirectly, including through smart contracts or voting protocols, by identifiable natural and legal persons.”
This marks a departure from the EU’s Markets in Crypto Assets regulation (MiCA), which counts decentralized platforms as obliged entities to reduce the existing regulatory gap in the region.
Under the new rules, decentralized platforms will be required to conduct due diligence and report suspicious transactions to authorities, similar to traditional financial institutions and real estate agents. This move aims to create a more level playing field between traditional and decentralized platforms in terms of regulatory compliance.
Following several weeks of negotiations, the AML regulation will advance to a plenary vote in the Parliament. If approved, inter-institutional negotiations between the Parliament, Council, and the European Commission will commence to finalize the legislation.
The European Parliament is set to confirm its stance on the AML package during a plenary session in April, paving the way for negotiations on the final shape of the bills.
