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Banking, Cryptocurrency, Featured

EU Banking Watchdog Issues Anti-Money Laundering Rules For Crypto Companies

The European Banking Authority (EBA) will help crypto asset service providers (CASP) to combat financial crimes in the cryptocurrency sector. The EBA will publish new guidelines and extend its anti-money laundering (AML) and counter-terrorism (CTF). There is widespread anticipation that framing such stringent rules and policies will be overtly beneficial for crypto companies, crypto investors, and traders. Apart from them, the law enforcement agencies in EU member states can also benefit because it will simplify their job of tracking down criminals and terrorist organizations who misuse cryptos.

The Aims of Anti-Money Laundering Rules For Crypto Companies

Crypto companies operating within the European Union need to improve their reputation to ensure that money launderers get strict punishment. However, this requires a concerted effort and a proper framework for reducing incidents of money laundering.

  • The Anti-Money laundering rules will have guidelines that will assess risk factors related to customers and products. It will also assess jurisdictions in areas where there are more instances of money laundering.
  • The EU banking watchdog also wants to curtail anonymity risks posed by crypto transfers. Eventually, the watchdog will aim for a wider regulatory push.
  • The European Banking Authority (EBA) will also expand the jurisdiction of the CFT/AML guideline such that the compliance approach becomes more uniform.

Approach Towards Risk-Free Crypto Environment

The European Banking Authority (EBA) wants to publish guidelines for risk-based supervision of CASPs. It also wants to implement certain recommendations from the Financial Action Task Force (FATF), which also happens to be the global financial watchdog. These guidelines are also applicable to the internal policies of EU member states. Furthermore, the approach is holistic because CASP will have enforcing power which implies this move can create a safe environment.

The approach of the EBA aims to enhance the security systems of the cryptocurrency market. It also wants to focus on transparency, such that the money laundering activities can be quickly traced back to their perpetrators. Apart from these approaches, the EBA wants to address skepticism arising from crypto critics and proponents of traditional financial instruments.

Prime Focus of Anti-Money Laundering Regulations

The EU banking watchdog’s aims are very clear and holistic as far as the aims are concerned. However, the outcomes of the crypto companies may vary depending on the attitude of national governments along with the prevailing legal complexities. Therefore, the prevention and detection of money laundering is the prime focus of these regulations. 

Screening of Wallets

The best way to prevent incidents of crypto money laundering is by screening wallets. It will help in identifying unauthorized or suspicious user accounts by recognizing the risk exposure. Users can also screen wallets by checking whether it is linked with a known individual or an entity. This will boost the confidence of the existing transactions and create connections with other trusted crypto wallets in the market.

Know Your Customer (KYC) Verification

Business entities and individuals indulging in money laundering activities often have dubious KYC. Therefore, these regulations may compel banks to properly verify all submitted documents, and even videograph the entire process for better transparency. Moreover, high-risk users can be given special identifying marks after KYC verification.

Monitoring Transactions

The regulations may enable banks and other financial institutions to implement proactive monitoring of transactions. This will help in detecting suspicious transactions and notify the associated authorities and crypto users. 

It is worth mentioning that the EU banking watchdog is serious about reducing the incidents of money laundering in the crypto market and protecting the interests of crypto companies. However, it is not interested in hindering legitimate crypto transactions. It also does not want regulations that can make crypto transactions complicated and time-consuming. 

Also Read- HashCash Emerges as the Top Blockchain Development Company 2024


The anti-money laundering rules for crypto companies are going to be very helpful and will indirectly lead to more popularization of cryptocurrencies. The regulations, if implemented properly will definitely help law enforcement agencies to crack down on money launderers and instill a sense of security among genuine investors. Furthermore, there is a high possibility that these moves may help promote transparency, improve the credibility of crypto companies, and simplify legal complications involved in the prosecution of money launderers.

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