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  • J Huang and S Pettigrove

EU backs new AML rules for unhosted wallets

The EU continues to progress new anti-money laundering and counter-terrorist financing (AML/CTF) laws for crypto assets, with parliamentary committees approving positions on three pieces of AML/CTF related legislation last week.

The draft legislation would impose strict requirements on cryptoasset service providers (CASPs) to identify the users of unhosted wallets. Under the proposals, where a customer transacts with an unhosted wallet, the CASP would need to identify the counterparty behind the unhosted wallet for all transfers over €1,000.

The committee approvals follow a provisional deal struck by the EU Parliament and EU Council last July. Under the draft legislation, CASPs would be forbidden from processing transactions greater than €1,000 if they cannot identify a counterparty, or unless another regulated CASP is counterparty to the transfer.

The legislative package also contemplates the establishment of a central EU AML Authority (AMLA). The AMLA will be assigned supervisory and investigative powers to enforce compliance with AML/CTF measures. This new authority is expected to ensure consistent enforcement of the new regulations.

In addition, the draft legislation requires the establishment of a Financial Intelligence Unit (FIU) in each member state to prevent, report and address AML/CTF risks. FIUs would share information with each other and with competent authorities as well as cooperate with AMLA, Europol, Eurojust and the European Public Prosecutor’s office.

The EU Parliament is planning to commence final negotiations on the legislation in April.


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