EU Reaches New AML Rule Agreement: Crypto Firms to Conduct Due Diligence on Transactions Over €1,000
TechFlow Selected TechFlow Selected
EU Reaches New AML Rule Agreement: Crypto Firms to Conduct Due Diligence on Transactions Over €1,000
The EU cryptocurrency industry also heavily lobbied during the legislative sessions to exclude NFTs and DeFi from the scope of the plan, and may have even successfully (at least temporarily) prevented restrictions on privacy-enhancing tools.
Navigating Web3 tides with focused insightsAuthor: Sandali Handagama
Translation: TaxDAO
-
The European Parliament and the Council of the EU have reached a provisional agreement on an anti-money laundering (AML) regulatory framework applicable to cryptocurrencies;
-
The agreed framework includes requiring crypto-asset companies to conduct customer due diligence for transactions of €1,000 or more;
While the industry is broadly satisfied with the outcome of the framework, some believe it may not be as equitable as policymakers anticipated.
Participants in the cryptocurrency industry are concerned that the new AML rules agreed upon by EU policymakers are stricter than those applied to traditional financial institutions. EU lawmakers reached an agreement this week on a comprehensive AML regulatory framework, including stringent requirements for crypto firms.
Under the agreed terms, service providers must strictly comply with customer verification requirements and take measures to mitigate risks associated with transactions involving self-hosted wallets and cross-border transfers.
Although the stated goal is to create a level playing field by applying the same rules to both crypto firms and banks, some industry insiders worry that policymakers’ insistence that digital asset firms undergo the same AML checks as other financial institutions may be somewhat hasty.
Robert Kopitsch, Secretary General of Blockchain Europe, said, "Despite enthusiastic press releases from the co-legislators about this agreement, a level playing field has not been created because the thresholds for crypto-asset service providers and other financial institutions are not the same."
The EU crypto industry also mounted strong lobbying efforts during legislative sessions to exclude NFTs and DeFi from the scope of the package, and may have even succeeded—at least temporarily—in preventing restrictions on privacy-enhancing tools.
Anti-Money Laundering Regulations
Last year, the EU made history by finalizing the first comprehensive cryptocurrency regulatory framework by a major jurisdiction. In addition to the landmark Markets in Crypto-Assets (MiCA) regulation, the bloc also established rules for collecting information on crypto-asset transfers (TFR), as part of broader AML regulations.
The Anti-Money Laundering Regulation (AMLR) is a wide-ranging initiative by the 27-nation bloc to combat illicit fund flows and sanctions evasion. Its targets include potential money laundering vehicles ranging from jewelry and luxury cars to major football clubs, and it caps large cash payments within the EU at €10,000.
AMLR aims to harmonize the EU’s rulebook and establish a supervisory authority with jurisdiction over the cryptocurrency sector. Eero Heinaluoma, the MEP leading the regulatory negotiations, said at a press conference on Thursday that while the AMLR package has not yet been finalized, “the main political principles have been agreed.”
Heinaluoma added that technical discussions on cryptocurrency-related details would begin Friday. Kopitsch said these discussions would not involve adjustments to actual measures but rather ensure the text's technical coherence.
NFTs and DeFi Out—What About Crypto Anonymity Tools?
Despite intense debate over whether NFTs should be regulated, Vyara Savova, Senior Policy Lead at the EU Crypto Initiative, said in a Wednesday call that these assets are likely to be excluded from the package.
Tommaso Astazi also indicated that NFTs and decentralized finance (DeFi) may remain outside the scope of the regulatory package. "I think it's safe to say the scope hasn't expanded. It's the MiCA scope," Astazi told CoinDesk in an interview on Thursday. He explained that crypto-asset service providers covered under MiCA will also fall under AMLR, whereas measures won’t apply where there is no AML obligation—specifically in the cases of DeFi and potentially NFTs.
Marina Markezic, co-founder of the EU Crypto Initiative, said during a Wednesday call that there were concerns AMLR might seek to ban or restrict crypto anonymity tools following sanctions on Tornado Cash, amid fears that sanctioned entities like Russia are using cryptocurrencies.
Astazi said on Thursday it remains unclear whether policymakers will continue discussing these tools or whether they will appear in the final text.
Are Banks and Crypto Firms Subject to the Same Rules?
In Heinaluoma’s own words, AMLR seeks to treat crypto-asset service providers equally with credit institutions, imposing equivalent obligations on both.
"Above all, the obligations that the banking sector now fulfills and will fulfill in the future will apply fully to crypto-asset businesses," Heinaluoma said at Thursday’s press conference. "This is important because we know significant amounts of money are moving from traditional payments into crypto."
Kopitsch noted that the agreed measures set different thresholds for customer due diligence across crypto firms, cash transactions, and financial institutions. Legal texts show that while all regulated entities must perform customer due diligence for transactions above €10,000, financial and credit institutions—and crypto firms—must conduct full customer checks for transactions exceeding €1,000. This, he said, is where the difference lies.
Crypto firms must also conduct basic Know Your Customer (KYC) checks on all occasional transactions—that is, transactions outside an established business relationship. "For occasional transactions, they still need to identify the customer and verify their identity. This is a change now," Astazi said, adding that currently such transfers can be carried out in certain EU member states where existing AML requirements are not uniformly enforced.
This isn't what the industry wanted, especially since it doesn't matter for fully regulated entities, but Kopitsch said the imposition of different thresholds "shows that the technological advantages of blockchain have not yet been recognized." He added, "As an industry, we can accept the final outcome of the AMLR negotiations because consistency in regulatory scope with MiCA and TFR has been ensured, which is key."
While it's difficult to provide an exact timeline, Savova expects the technical discussions on AMLR to be "quite intense," as policymakers aim to submit the package for parliamentary approval in April, ahead of upcoming elections. "This means for us, as representatives of the crypto industry, AMLR work is moving at a faster pace," she said.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
CoinDesk
