EU steps up efforts to combat cryptocurrency money laundering: due diligence on transactions above €1,000

The Council of the European Union announced today that it has reached a provisional agreement with the European Parliament to agree on part of the "Comprehensive Supervisory Program to Combat Money Laundering". Under the agreement, all cryptocurrency companies will be required to conduct due diligence on their customers to more effectively protect EU citizens and the financial system from the threats of money laundering and terrorist financing. This initiative aims to strengthen regulatory measures and ensure that illegal activities such as money laundering and terrorist financing are more effectively combated.

Belgian Finance Minister Vincent Van Peteghem said that this agreement is an important part of the EU’s new anti-money laundering system and aims to improve the organizational and collaborative capabilities of various countries’ anti-money laundering and counter-terrorism financing systems. Through this agreement, EU member states will be able to work better together to prevent fraudsters, organized criminals and terrorists from using the financial system to legalize their illicit gains. This will help strengthen the stability of the European financial system, safeguard public security, and protect the integrity and transparency of financial markets.

Crypto companies must conduct due diligence on transactions above €1,000

The statement mentioned that the interim agreement requires crypto asset service providers (CASP) to expand the obligations of entities to comply with anti-money laundering regulations. The scope of their responsibilities means they must conduct due diligence on customers, verify customer facts and information, and report suspicious activity.

Under the agreement, CASP is required to conduct customer due diligence when conducting transactions of 1,000 euros ($1,090) or more. Additionally, the agreement highlights risk mitigation measures for transactions related to self-hosted wallets.

According to the agreement, if cash payments are made, the obligated entity is required to identify and verify persons making cash transactions ranging from 3,000 euros to 10,000 euros. In addition, the maximum limit for cash payments within the EU is €10,000.

Enhanced Due Diligence

The Council and Parliament have also introduced specific enhanced due diligence measures for cross-border agency relationships with crypto-asset service providers.

The Council and Parliament unanimously agreed that credit and financial institutions will increase due diligence when dealing with the assets of high net worth individuals. Otherwise, ignoring this requirement will be considered grounds for increased punishment.

The agreement needs to be approved by the Committee of Permanent Representatives and representatives of member states in the European Parliament, and also needs to be formally adopted by the Parliament and the Council before it can take effect.

Background of the Comprehensive Supervisory Program to Combat Money Laundering

On July 20, 2021, the European Commission proposed a comprehensive regulatory program to combat money laundering to strengthen the EU’s anti-money laundering and combating the financing of terrorism (AML/ CFT) legislation. The comprehensive regulatory package includes:

Regulations establishing a new EU Anti-Money Laundering Agency (AMLA), which will have the power to impose sanctions and penalties

A regulation recasting funds transfer regulations, Designed to make the transfer of crypto assets more transparent and fully traceable

Regulations on private sector anti-money laundering requirements

Directive on anti-money laundering mechanisms

Last year, the EU finalized Specific anti-money laundering checks on crypto fund transfers and landmark Markets in Crypto-Assets (MiCA) regulation. In December, the European Parliament and Council agreed to establish an anti-money laundering supervisory authority.

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