The European Union is poised to take the first steps towards fighting anonymity in cryptocurrency with the adoption of comprehensive Anti-Money Laundering (AML) policies. Under these new rules, which are expected to go into effect by the year 2027, credit institutions and financial service providers, including crypto asset service providers (CASPs), will not be allowed to maintain accounts or facilitate transactions on a chronology-free or privacy-respecting basis. This move signals a major change regarding maritime digital assets.
Anonymity No Longer Permitted Under New Rules
As stipulated by Article 79 of the new Anti-Money Laundering Regulation (AMLR), the EU Crypto Initiative’s (EUCI) published AML Handbook outlines that anonymous accounts are no longer permitted. With this regulation, businesses within finance and crypto are prohibited from servicing accounts that permit concealment of user identity. The restriction surpasses traditional bank and payment accounts to include passbooks, safe-deposit boxes, and crucially, “crypto asset accounts permitting anonymization of transactions,” as well as “accounts using anonymity-enhancing coins.”
Finalized Framework: Further Implementation Details Pending
While the foundational aspects of the new AML framework are now finalized, the works of implementing and delegated acts are still determining “the fine print” of some requirements. Important foundational aspects that put together the structure will focus on setting what rules are generally going to be used. Vyara Savova, the EUCI’s senior policy lead, noted that most of this work will fall under the responsibility of the European Banking Authority, while the EUCI will be welcomed to provide feedback during public consultations on these level two acts.
“The broader framework is final,” Savova pointed out, stressing, urging CASP-defined centralized crypto projects under the Markets in Crypto-Assets Regulation (MiCA) to reconsider processes and policies in light of the new defined internal policy frameworks and legislative tools.
Increased Oversight for Crypto Service Providers
The enforcement of the new regulation will also result in an increased level of oversight regarding the activities of crypto asset service providers within the boundaries of the European Union. Per the regulation, Cross-Border CASPs that have significant business activities in several jurisdictional member states will face direct Anti-Money Laundering (AML) supervisory oversight.
The AMLA intends to proactively create 40 supervising portfolios to be conducted within the framework of direct supervision, making sure that there is at least one representative from each member state. The selection process is expected to begin on July 1, 2027, wherein, for such monitoring purposes, a firm, “having materiality presence multi-jurisdictionally,” will be defined using “materiality thresholds” of “at least 20,000 customers in the host member state” or “total transactions above 50 million euros ($56 million).”
Mandatory Due Diligence: Scrutinizing Transactions
In addition to strong enforcement of the AML contours, the updated policy will set forth due diligence requirements for customers for cryptocurrency transactions exceeding 1,000 euros ($1,100). This specific aim is geared towards large crypto transaction amounts while maintaining blockchain’s pseudo-anonymous transfer system to reduce the interaction of non-compliant funds with the digital financial assets.
Expanding MiCA: A Consolidated Regulatory Framework
The revisions mark further advancement towards the development of a comprehensive and sophisticated regulatory framework for the cryptocurrency sector by the European Union. The new rules on Anti-Money Laundering (AML) are based on the work done under the Markets in Crypto-Assets Regulation (MiCA), which lays down broad-based control with the marking and trading of digital assets in the European Union (EU). By dealing with anonymity, the EU is looking toward responsible advancement of the cryptocurrency market.
