In recent news, the European Banking Authority (EBA) is seeking public input on proposed amendments to its anti-crypto money laundering guidelines. The amendments primarily focus on including crypto-asset service providers (CASPs).
Sources reveal that the EBA has started a public consultation to collect inputs on proposed amendments to its guidelines on the risk factors of money laundering and terrorist financing (ML/TF). The recent step is part of the ongoing efforts to strengthen the European Union’s (EU) defenses against crypto-enabled crimes.
According to the EBA, the main goal of the proposed changes is to include crypto-asset service providers within the scope of the guidelines to maintain vigilance and transparency. The EBA’s announcement has given a deadline of August 31, 2023, to stakeholders and interested parties to pitch in their inputs on the consultation process.
The EU explains a CASP as a legal agency or person offering services such as crypto-fiat exchange, crypto-crypto exchange, custodian services, operating trading platforms, participating in crypto asset issuance, or providing financial services related to crypto assets.
In recent times, CASPs and other credit and financial institutions are facing significant ML/TF risks. However, crypto’s ease of transferability and enhanced privacy pose unique challenges. In particular, the European continent has been working to minimize money laundering in its continent through numerous practices.
Reportedly, the EBA intends to revise the ML/TF risk factors guidelines to establish uniform regulations for CASPs. These guidelines are also expected to detail CASPs’ steps to identify and mitigate ML/TF risks effectively. The proposed changes include specific guidance for CASPs to help them understand and address ML/TF risks.
With its framework, the EBA advises CASPs to assess these risks regularly during their business relationships and manage their customer due diligence appropriately. The amendments also offer guidance to other credit and financial institutions regarding the risks when engaging with CASPs or having exposure to crypto assets.
Furthermore, the EBA is working on additional guidance for AML/CFT supervisors of CASPs, which will be included in the revised risk-based supervision guidelines. These amendments are open for consultation until June 29, 2023.
The increasing use of crypto to launder illicit money and finance terrorism has brought the industry under suspicion. Regulators across the globe want to leave no stone unturned in their bid to monitor the sector. Recently, the Japanese government has decided to implement stricter anti-money laundering measures for cryptocurrency transactions.
Notably, considering the large-scale threats posed by money laundering and terrorism financing have made it a major concern among international watchdogs. The Financial Action Task Force (FATF) has a “grey list” of nations that do not have sufficient money-laundering policies. It deemed Japan’s existing AML legislation insufficient and hence lawmakers revised the legislation in December to address the shortcomings.
