- EU Parliament mandates new KYC and AML rules for crypto on April 24, 2024.
- New regulations under MiCA are to be fully applicable by year-end.
- AMLA in Frankfurt will oversee compliance with crypto regulations.
On April 24, 2024, the European Parliament approved new regulations targeting money laundering within the cryptocurrency sector. These rules impose mandatory due diligence and identity verification for customers. They apply to crypto asset managers and centralized exchanges.
The legislation enhances existing Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols. Under the Markets in Crypto-Assets (MiCA) framework, crypto-asset service providers (CASPs) must now conduct thorough customer due diligence (CDD) and report any suspicious activities to the authorities.
This initiative aligns with the European Union‘s broader strategy to govern digital assets and their markets effectively. MiCA, effective June 2023, will be fully applicable by the end of the year. The new anti-money laundering regulations will complement this framework to secure a transparent crypto ecosystem.
The Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA), located in Frankfurt, Germany, will oversee these regulations and ensure compliance among CASPs and other relevant entities.
While the European Parliament has passed the law, the Council of the European Union must formally adopt it. It will also need publication in the EU Official Journal before enforcement. The legislation is set to be applied three years after these steps.
Patrick Hansen, EU strategy and policy director at Circle, confirmed these details. He noted that the new CASP requirements build on those already established under Anti-Money Laundering Directive 5 (AMLD5).
Earlier proposals for the Anti-Money Laundering Regulation (AMLR) had suggested stricter KYC measures for self-custody wallets. This version raised concerns about potential negative impacts on innovation and adoption in the crypto industry.
However, industry advocacy led to a revised, balanced version of the law. It allows multiple compliance options, considering the unique aspects of the crypto world. This final version has been described by Hansen as a “positive result.” The adoption of these new rules by the European Parliament is a crucial step in refining the regulatory framework for the cryptocurrency industry.
The European Parliament has adopted new rules to adjust the regulatory framework for the cryptocurrency industry. As the sector expands, the EU seeks to balance innovation with financial system integrity. The framework established by MiCA and the new rules reflect the EU’s regulatory approach.
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