The European Parliament adopted a new AML law package which increases the reporting requirements of crypto asset service providers (CASPs) when sending and receiving ‘anonymous’ payments between self-hosted wallets and custodial service providers, in addition to limits on cash transactions and the establishment of a ‘central watchdog’ agency, which will develop regulatory technical standards.

Under the new laws, EU CASPs will need to perform customer due diligence on transactions originating from self-custodial wallets for transactions below 1000 EUR, and implement additional KYC measures for transactions above 1000 EUR. The laws further regulate the operation of no-KYC custodial software service providers and the use of privacy coins, effectively banning CASPs from offering privacy assets. Self-custodial software and hardware providers are exempt from the regulations.

The resolution, adopted by the European Parliament on wednesday, assumes that “[t]he anonymity associated with certain electronic money products exposes them to money laundering and terrorist financing risks,” and “[t]he anonymity of crypto-assets exposes them to risks of misuse for criminal purposes.”

While lawmakers seemed to have no issues putting numbers to overall money laundering activity in the original proposal – ranging between 2-5% of global GDP – as well as to their own inefficiencies – almost 99% of criminal profits escape confiscation – those looking for numbers corroborating “the increasing use of crypto-assets (such as Bitcoin) for money-laundering purposes” are left with a link to Investopedia, explaining what Bitcoin is.

Everybody knows: Crypto is for money launderers. But can anybody prove it?

With the new law package, EU AML/CFT frameworks are updated to align with updated recommendations issued by the Financial Action Task Force – an intergovernmental body established by the G7 in 1989 to tackle money laundering and terrorist financing.

According to FATF procedures, FATF recommendations are informed by AML and CFT assessments performed by FATF regional bodies (FSRBs), the IMF, and the World Bank to “produce objective and accurate reports of a high standard in a timely way,” “[e]nsure that there is a level playing field, whereby mutual evaluation reports (MERs), including the executive summaries, are consistent, especially with respect to the findings, the recommendations and ratings,” and “[e]nsure that there is transparency and equality of treatment, in terms of the assessment process, for all countries assessed.”

The latest EU FSRB 2021 annual report, released in April 2023 performed by the EU Commission’s MONEYVAL, opens with a introduction by the chair, who highlights that “It is well known that money launderers have been abusing cryptocurrencies from their inception a decade ago, initially to transfer and conceal proceeds from drug trafficking. Nowadays, their methods are becoming ever more sophisticated, and…



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