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EU’s Preliminary Deal Mandates Crypto Checks on Transactions of €1,000 or More

In a significant move to strengthen the European Union’s fight against money laundering and terrorism financing, policymakers in the EU reached a provisional deal on Wednesday regarding a comprehensive regulatory package. The Anti-Money Laundering Regulation (AMLR) is poised to reshape the financial landscape, introducing stringent measures that will extend to the burgeoning crypto sector.

The key components of the agreement include the creation of a single rulebook and the establishment of a supervisory authority with oversight over the entire financial sector, including crypto. Vincent Van Peteghem, the Belgian Minister of Finance, emphasized the importance of this agreement within the broader context of the EU’s anti-money laundering system, stating that it would enhance the coordination of national systems against illicit financial activities.

A pivotal aspect of the agreement is the extension of the list of obliged entities, such as financial institutions, banks, real estate agencies, and asset management services, to now include the crypto sector. This means that all crypto-asset service providers (CASPs) will be required to conduct customer due diligence on transactions amounting to €1,000 or more, ensuring that they verify customer information and report any suspicious activity.

The agreement reflects a holistic approach to combating money laundering, extending customer due diligence measures to various sectors beyond finance. Luxury goods traders, including those dealing in precious metals, stones, jewelry, high-end vehicles, airplanes, yachts, and cultural goods, will also become obliged entities, subject to the same scrutiny.

Acknowledging the high-risk nature of the football sector, the provisional agreement includes professional football clubs and agents as obliged entities, with member states having the flexibility to remove them from the list if they represent a low risk after a longer transition period.

To address the challenges posed by cross-border transactions involving crypto-assets, the Council and Parliament introduced specific enhanced due diligence measures. Moreover, a EU-wide maximum limit of €10,000 for cash payments was set, providing member states with the flexibility to impose a lower limit if deemed necessary.

Beneficial ownership rules were also harmonized and made more transparent, with a threshold of 25% ownership and control. The agreement emphasizes the need for transparency in multi-layered ownership and control structures, aiming to eliminate hiding behind complex corporate structures.

High-risk third countries will be subject to enhanced due diligence measures, based on assessments by the Financial Action Task Force (FATF), with the possibility of additional EU or national countermeasures.

The Anti-Money Laundering Directive included in the agreement addresses beneficial ownership registers, allowing public access to the information. The directive grants entities in charge of the registers the power to carry out inspections when doubts arise regarding the accuracy of submitted information.

The agreement also enhances the role of Financial Intelligence Units (FIUs), granting them immediate and direct access to relevant financial, administrative, and law enforcement information. FIUs will collaborate more closely in cross-border cases, with an upgraded FIU.net system for faster dissemination of reports.

Supervision of obliged entities will be bolstered, with a risk-based approach and the introduction of supervisory colleges for the non-financial sector. Both EU and national risk assessments will continue to play a crucial role.

The texts are now set to be finalized and presented to member states for approval. If approved, the Council and the Parliament will formally adopt the texts before they enter into force, marking a significant step forward in the EU’s efforts to safeguard its financial system against money laundering and terrorist financing.

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