LUCKNOW (CoinChapter.com) — The European Banking Authority (EBA) has extended its Anti-Money Laundering and Counter-Terrorist Financing guidelines to include cryptocurrency companies operating in the EU. This move is part of the EBA’s efforts to fight regional financial crimes.
The new guidelines aim to assist crypto asset service providers (CASPs) in identifying potential risks related to money laundering and terrorist financing that may arise from their “customers, products, delivery channels, and geographical locations.”
“The risks of this happening can be increased, for example, because of the speed of crypto-asset transfers or because some products contain features that hide the user’s identity. Therefore, it is important that CASPs know about these risks and put in place measures that effectively mitigate them,” the statement said.
Specifically, the guidelines outline procedures and tools that EU-based crypto companies can utilize to assess these risks, such as leveraging blockchain analytics to monitor transactions.
Risk Mitigation Measures for Crypto Firms
The EU banking updated guidelines require crypto service providers to follow strict know-your-customer and anti-money laundering protocols.
Specifically, companies dealing with digital currencies will need to verify customer identities, monitor transactions for suspicious patterns, file activity reports with regulators, and take risk-based actions on high-risk individuals or entities. The EBA said crypto firms must also establish internal controls, conduct employee screening, and train staff on compliance.
These new guidelines recommended internal controls and policies. EU-based virtual asset companies should implement this guidance to mitigate the risks of financial crimes. Additionally, these guidelines align with standards set forth by the global financial watchdog, the Financial Action Task Force (FATF).
Unified Regulatory Standards for Traditional and Crypto Firms
The banking authority aims to set unified regulatory standards for virtual assets across EU countries. They stated that imposing consistent anti-money laundering rules on traditional and crypto finance sectors is crucial.
“Given the interdependence of the financial sector, the new Guidelines also include guidance addressed to other credit and financial institutions that have CASPs as their customers or which are exposed to crypto assets,” the EBA said.
The move also came before the EU’s sweeping Markets in Crypto Assets (MiCA) regulations took full effect.
Industry associations warned that the EU Banking updated guidelines may be technically challenging for crypto startups to implement. However, regulators stressed that criminals can take advantage of anonymous, decentralized systems for criminal activity. The EBA says supervisory bodies can fine or shut down non-compliant crypto companies.
