Highlights:
- The EBA has extended Travel Rule guidelines to crypto service providers since December 30 to enhance AML measures.
- Crypto-asset service providers must declare multi-intermediary and cross-border transfer policies under new EU regulations.
- EU Travel Rule Guidelines require crypto exchanges to report transfer details, aiming to combat money laundering and terrorism financing.
The European Banking Authority (EBA) has announced new regulations extending the Travel Rule guidelines to include crypto service providers starting December 30. This move aims to enhance anti-money laundering (AML) measures within the European Union (EU).
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EBA’s New Guidelines
The EBA’s new guidelines will require crypto-asset service providers (CASPs) to comply with the EU’s Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regime. These providers and their intermediaries will need to adhere to Regulation (EU) 2023/1113, which mandates reporting detailed information on transfers of funds and crypto assets.
The #EBA has just published new guidelines on the information that should accompany transfers of funds and certain crypto assets.
🔗https://t.co/uNykQqOHwb pic.twitter.com/EwA6ZtYm8c
— EU Banking Authority – EBA 🇪🇺 (@EBA_News) July 4, 2024
The regulation, known as the Transfer Funds Regulation (TFR), was introduced to align the EU legal framework with Financial Action Task Force (FATF) standards.
The EBA’s guidelines specify the information that should accompany transfers and outline the steps that payment service providers (PSPs), intermediary PSPs (IPSPs), and CASPs must take to detect and manage missing or incomplete information. This initiative aims to create a uniform approach across the EU, allowing relevant authorities to trace transfers effectively to prevent, detect, or investigate money laundering and terrorist financing.
Impact on Crypto Exchanges
Starting December 30, crypto exchanges operating within the EU will be subject to the Travel Rule guidelines. This extension means CASPs will now be part of the EU’s AML/CFT system. These providers will have a two-month buffer period to declare adherence to the new requirements. This involves collecting user information for fund transfers, identifying transactions related to the purchase of services, and detecting linked transfers.
Furthermore, CASPs and their intermediaries must declare their policies on multi-intermediary and cross-border transfers. The goal is to ensure that all transactions are transparent and traceable, making it difficult for illicit activities to go undetected.
While the new guidelines will impose financial and operational stress on crypto exchanges and service providers, the EBA believes the long-term benefits outweigh the initial costs. According to the regulatory agency, these guidelines will contribute to more effective measures against money laundering and terrorist financing.
In its announcement, the EBA emphasized the importance of a consistent approach to implementing the Travel Rule across the EU. By doing so, the regulation will enable authorities to trace transfers when necessary fully. Consequently, this will enhance the overall security and integrity of the financial system.
Compliance and Reporting
Authorities are required to report their compliance with the guidelines within two months of the translation into their respective languages. This timeline ensures that all EU member states are on the same page regarding implementing the Travel Rule.
The EBA has also published additional guidance for AML/CFT supervisors and CASPs on managing money laundering and terrorist financing risks. This comprehensive approach ensures clear and actionable instructions for all parties, facilitating a smooth transition to the new regulatory framework. Additionally, it aims to streamline the process and enhance compliance.
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