In context: Due to its anonymous nature, cryptocurrency has long been associated with scams, money laundering, and other financial crimes. Users can track crypto asset transfers, but the originator and recipient of the transfer always remain anonymous. To combat that, the European Commission plans to ban crypto transfers and anonymous wallets.
The proposals of the European Commission (EC) presented This week aims to protect EU citizens and the EU financial system by enforcing its rules against money laundering (AML) and the financing of terrorism (CFT). With the package of proposals, EC hopes to detect and disrupt criminal and terrorist financing activity.
The EC package consists of four proposals: the creation of a new EU AML / CFT authority, the implementation of new rules affecting the Customer Due Diligence and Benefit Beneficiary areas, updating the existing Directive 2015/849 / EU with new rules that cover national supervisors and Financial Intelligence. Units in member states and a revision of the 2015 Funds Transfer Regulation to track crypto asset transfers.
Most of these proposals are aimed at large companies, but some also affect the general public that owns crypto assets. Under the new EC proposal, service providers will be required to perform due diligence with their customers. In addition, it will ensure that all transfers are fully traceable, from source to destination, avoiding “possible uses for money laundering or terrorist financing.”
If approved, cryptographic service providers handling asset transfers or a traditional wire transfer will ensure that it is accompanied by the originator’s name, originator’s account number, originator’s address, personal document number, identification or the date and place of birth, the beneficiary’s name, the beneficiary’s account number, and where the accounts exist.
On the other hand, the beneficiary’s service provider will be responsible for implementing a system capable of detecting the legitimacy of the originator’s information and a monitoring system to detect if any information about the originator or the beneficiary is missing.
Before becoming law, the proposal must be accepted by the European Parliament and the EU member states. It is unclear when the parties will vote on this matter, as the process can take up to two years.
Image Credit: Ewan Kennedy