The European Parliament and the EU Council reached, on Wednesday 29 June, a provisional agreement on the transparency of crypto-asset transfers (see EUROPE 12942/23). This revision of the ‘transfers of funds’ Directive aims to make it more difficult for criminals to use cryptocurrencies for money laundering.
Until today, crypto-asset transfers remained outside the anti-money laundering regime on traceability requirements that apply to wire transfers.
“The new rules will enable law enforcement officials to be able to link certain transfers to criminal activities and identify the real person behind those transactions”, said the MEP, Ernest Urtasun (Greens/EFA, Spain), co-rapporteur on the text, in a statement.
As the MEPS wanted, the text is very ambitious, since the scope will allow traceability from the first euro, according to the ‘travel rule’.
This standard will also apply to transfers to and from ‘unhosted’ wallets. This means that crypto-asset service providers (CASPs) will be required to collect from the customer and store information about these transfers.
Before making crypto-assets available to recipients, providers will need to verify that the source of the assets is not subject to restrictive measures or sanctions, and that there is no risk of money laundering or terrorist financing.
“Terrorists used cryptocurrencies for fundraising, to access child pornography and criminals laundered their proceeds through it. This has really harmed people’s lives and raised doubts about the crypto sector”, explained Assita Kanko (ECR, Belgium), European Parliament co-rapporteur, in a statement.
Crypto-asset providers will also be required to put in place internal procedures and controls to ensure compliance with the targeted financial sanctions.
CASPs will also be obliged to collect and make accessible certain data on the originator and beneficiary of the crypto-asset transfers they process, in the same way as payment service providers do for wire transfers. This will make it easier to detect and block any suspicious transactions.
Negotiators agreed that the establishment of a public register of non-compliant and unsupervised providers, with which EU CASPs would not be allowed to trade, will be covered by the rules on Markets in Crypto-assets (MiCA), currently under interinstitutional negotiation (see EUROPE 12963/2).
The negotiators did, however, ensure data protection. Information on the ‘travel rule’ should only be handled and made available to CASPs executing the transfers and to competent authorities. (Original version in French by Anne Damiani)