European Council Launches New AML Authority for Crypto Regulation

The Birth of the AML Authority

It seems the European Council has decided to take the plunge into the dark waters of cryptocurrency regulation. In a historic move, they have agreed to form an Anti-Money Laundering Authority (AMLA) with a keen eye on supervising crypto asset service providers (CASPs). This development is like finding a lifeguard on a beach that previously had more sharks than swimmers.

What This Means for Crypto Firms

So, what exactly does this mean for our beloved crypto firms? According to the council, the AMLA will specifically supervise “high-risk and cross-border financial entities.” If these firms are perceived as risky, expect them to be on the regulator’s watchlist. And let’s be honest, if your financial activities involve more bated breath than a horror movie, you might just be one of those firms.

The Transfer of Funds Regulation

A further twist in this regulatory saga is the provisional political agreement regarding the government body’s Transfer of Funds Regulation. Sources suggest that crypto service providers may soon be required to collect personal data for transfers, regardless of size, particularly concerning unhosted wallets. It feels a bit like being asked for your ID before you can exchange that very cool sticker with your friend.

Closing the ‘Wild West’ Loop

European Parliament member, Ernest Urtasun, remarked on these new regulations saying, “We are putting an end to the wild west of unregulated crypto.” One can almost hear the harmonica playing in the background as the tumbleweed rolls by. The new rules, however, will not apply to peer-to-peer (P2P) transfers where there is no obligatory entity involved. So yes, you can still trade those cool stickers without a government snoop watching over your shoulders!

Enhanced Due Diligence

CASPs will need to employ enhanced due diligence measures for all transfers involving unhosted wallets, treating these situations on a risk basis. This is akin to a bouncer at a club assessing who gets in and who doesn’t – a lot of judgment will now go into who the cool kids in crypto are.

Looking Ahead: When Will This Happen?

This ambitious proposal, which first emerged in July 2021, aims to become operational by 2024. The AMLA will advocate for direct supervision, which is set to roll out slightly later. For those crypto fans looking to continue their libertarian fantasies without oversight, this news may dampen the party – but at least it means there’ll be a lifeguard on duty.

A Collaborative Future

As one of the first regulatory bodies set to oversee money laundering across large regions of Europe, the AMLA will collaborate with national financial intelligence units and local regulators. It seems Europe is gearing up to tackle the financial predators and protect those who genuinely want to innovate in the crypto space. Like Batman and Robin, only with less spandex.