The European Commission (EC) announced “an ambitious package” of legislative measures that, if implemented, would reduce EU individuals’ privacy.
“The measures announced today significantly improve the existing EU framework by taking into consideration new and developing concerns related to technological innovation. These include virtual currencies, more integrated financial flows in the Single Market, and terrorist organizations’ worldwide nature “According to the EC.
According to them, these ideas will contribute to the development of a “far more consistent framework to ease compliance for operators subject to AML/CFT [anti-money laundering/counter-terrorism financing] requirements, particularly those engaged cross-border.”
The following are the proposals’ key crypto-related points:
The proposed reform would apply EU AML/CFT laws to the whole cryptocurrency sector.
All service providers would be required to perform due diligence on their clients.
“The modifications would ensure full traceability of crypto-asset transfers, such as Bitcoin,” according to the press release.
It will be illegal to use “anonymous crypto asset wallets.”
The EC discusses “custodian wallet providers” in its proposal for a revised rule on financial transfers, stating that a “wallet address” is an account number whose custody is assured by a cryptoasset service provider or an alphanumeric code for a wallet on a blockchain.
The EC further stated that the new AML/CFT framework proposed “would align the scope” of the Anti-Money Laundering Directive.
It already applies to exchanges of cryptoassets for money, which are covered under the European Commission’s proposed Regulation on Markets in Crypto Assets (MiCA), as well as swaps of one cryptoasset for another.
“These proposed rules prohibit the creation or use of an anonymous cryptoasset account,” they stated.
The Commission also proposes that all cryptoasset service providers involved in cryptoasset transfers gather and make available data on the originators and beneficiaries of transfers of virtual or crypto assets that they manage.
Meanwhile, the EC maintains that these suggestions are intended to strike “the correct balance between tackling these concerns and complying with international standards while not imposing an undue regulatory burden on industry.”
“On the contrary, our measures will aid the development of the EU crypto-asset market, since it will benefit from an updated, harmonized legal framework across the EU,” they stated.
The European Parliament and Council will now debate the legislative package. In addition, the European Commission (EC) believes that the new EU-level Anti-Money Laundering Authority (AMLA) would be functioning by 2024. However, it would begin its role of direct supervision “Later, once the Directive has been adopted and the new regulatory framework is in effect. “The AMLA would be the primary authority coordinating national agencies to guarantee that the private sector appropriately and consistently executes EU legislation.””
“Money laundering is an obvious and present danger to citizens, democratic institutions, and the financial system. The magnitude of the problem cannot be overstated, and the gaps that criminals can exploit must be filled “The release quoted Mairead McGuinness, Commissioner for Financial Services, Financial Stability, and Capital Markets Union, as stating.