The European Commission (EC) has outlined a set of proposals that aim to regulate cryptocurrency transfers more tightly using existing anti-money laundering (AML) and countering terrorism financing (CTF) laws.
A key change is that it will ban all cryptocurrency service providers from offering anonymous cryptocurrency wallets, while existing AML rules would be expanded to the whole crypto sector, including all crypto-asset service providers (CASPs).
“Today’s amendments will ensure full traceability of crypto-asset transfers, such as Bitcoin, and will allow for prevention and detection of their possible use for money laundering or terrorism financing. In addition, anonymous crypto asset wallets will be prohibited,” the EC said.
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Providers will need collect cryptocurrency holders’ name, address, official personal document number, customer ID number or date and place of birth.
“At present, only certain categories of crypto-asset service providers are included in the scope of EU AML/CFT rules,” the EC said in a statement.
“The proposed reform will extend these rules to the entire crypto sector, obliging all service providers to conduct due diligence on their customers.”
The cryptocurrency proposal outlines future obligations on all Virtual Asset Service Providers (VASPs) “to collect and make accessible data concerning the originators and beneficiaries of the transfers of virtual or crypto assets they operate.”
The EC is concerned that differences in AML/CFT laws among EU member nations is exploited by organized crime for money laundering and terrorism financing.
“Transfers of virtual assets fall today outside of the scope of Union legislation on financial services,” the proposal stated. “The lack of such rules leaves holders of crypto-assets exposed to money laundering and financing of terrorism risk.”
Current EU rules fail to cover the traceability of the virtual assets transfers and the information sharing obligations between crypto assets services providers, as current EU rules only apply to wire transfers, it adds.
CASPs must ensure that transfers of crypto-assets are accompanied by the name of the originator, the originator’s account number, where such an account exists and is used to process the transaction it states.
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Other details CASPs will need to collect in order to transfer crypto assets include the originator’s address, official personal document number, customer identification number or date and place of birth.
On the beneficiary’s side, the CASP “must implement effective procedures to detect whether the information on the originator is included in, or follows, the transfer of crypto-assets.”
These rules will remain proposals until the European Parliament votes to support the amendments.
