In a move to fortify Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) compliance standards, the European Banking Authority (EBA) has introduced a set of proposals. Published on November 24th, the consultation paper addresses existing inadequacies in regulations and calls for stakeholder feedback.

Targeting Financial Crime through Enhanced Detection

The EBA’s proposal focuses on refining the detection of missing or incomplete information in fund transfers, a vulnerability often exploited for financial crimes. To achieve this, the agency recommends the repeal of the 2017 guidelines and the consolidation of procedures within the legislative framework.

The proposed rules are not limited to traditional financial institutions; they also encompass Crypto Asset Service Providers (CASPs), including exchanges and custodial wallet providers. This expansion of compliance measures acknowledges the evolving landscape of crypto assets and the need for comprehensive oversight.

A screenshot of the front page of the consultation paper

Addressing the Challenge of Self-Hosted Crypto Addresses

A key highlight of the proposal involves CASPs collecting and maintaining information on self-hosted crypto addresses. Notably, when transfers from such addresses surpass €1,000, CASPs must identify the owner and verify their control of the address. While the timeframe for this threshold remains unspecified, this measure aims to close an information gap exploited by criminals.

Enhancing Transparency for a Secure Crypto Environment

The overarching goal of the consultation paper is to enhance transparency and oversight in the realm of crypto assets. By addressing vulnerabilities and implementing stricter controls, the EU aims to prevent the abuse of crypto assets for illicit activities.

With the public consultation period open until February 26th, stakeholders have the opportunity to provide valuable feedback to the EBA. The finalized rules, expected to result from this collaborative effort, will play a pivotal role in shaping a more secure and regulated environment for crypto assets in the European Union.

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