A PYMNTS Company

EU Agrees On Strong AML Rules For Crypto Transactions

By  |  June 30, 2022

EU policymakers agreed on new anti-money laundering (AML) rules for crypto transactions on Wednesday, June 29. The agreement contemplates that for transactions between digital wallet providers, like crypto exchanges, the parties will need to verify customer identities even for the smallest crypto transfer, as it was originally foreseen in the first draft introduced in July 2021. 

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    However, lawmakers decided to leave most small payments or transfers to unhosted private wallets out of laundering checks, a departure from the original proposal. Yet, payments to unhosted wallets over 1,000 euros will still need to be reported, in line with similar provisions applicable for transfers in traditional banking. 

    “The new rules will enable law enforcement officials to be able to link certain transfers to criminal activities and identify the real person behind those transactions,” said Ernest Urtasun, a Spanish Green Party lawmaker and rapporteur of this proposal. 

    With this compromise, both proponents and critics of the rules could claim a partial victory. EU lawmaker Ondřej Kovařík confirmed the provisional deal in a tweet, saying that it “strikes the right balance in mitigating risks for fighting money laundering in the crypto sector without preventing innovation and overburdening businesses.” And for unhosted wallets, he said that the outcome had “moved quite far from the initial proposal of the European Parliament.”

    In March, lawmakers voted on a proposal for a “regulation on information accompanying transfer of funds and certain crypto assets” (the so called “travel rule” regulation).  Under this rule, crypto firms such as exchanges would have to obtain, hold and submit information on those involved in a transfer with the purpose of combating money laundering. Initially the rule established a “de minimis” threshold (1,000 euros) below which the rule wouldn’t apply, but this threshold was subsequently removed. Some lawmakers also wanted to expand the scope of the bill to include transactions to unhosted digital wallets and collect the same information.  

    The crypto industry showed its discomfort with the new rules, in particular with the removal of the “de minimis” rule. Paul Grewal, chief legal officer at Coinbase, published an opinion urging others to make their voice heard before today’s vote.  

    “If adopted, this revision would unleash an entire surveillance regime on exchanges like Coinbase, stifle innovation, and undermine the self-hosted wallets that individuals use to securely protect their digital assets.” 

    Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.