EU Parliament agree to update existing rules for tracing crypto transfers

EU ambassadors have agreed on a mandate to negotiate with the European Parliament a proposal to update existing rules on information accompanying transfers of funds. The update aims to extend the scope of the rules to certain crypto-assets.

"Today’s agreement is an important step towards closing the gaps in our financial systems that are malevolently used by criminals to launder unlawful gains or finance terrorist activities. Crypto-assets are more and more at risk of being exploited for money laundering and criminal purposes, and I’m glad the Council could make swift progress on this urgent proposal, stated Andrej Šircelj, Slovenian Minister for Finance

The aim of the proposal is to introduce an obligation for crypto-asset service providers to collect and make accessible full information about the sender and beneficiary of the transfers of virtual or crypto assets they operate. This is what payment service providers currently do for wire transfers. The purpose is to ensure traceability of crypto-asset transfers, so as to be able to better identify possible suspicious transactions and if necessary blocking them.

The modifications introduced by the Council in its position streamline and clarify the Commission’s proposal, in particular by introducing requirements for crypto-asset transfers between crypto-asset service providers and un-hosted wallets. It also requires that the full set of originator information travel with the crypto-asset transfer, regardless of the transaction amount. Given the urgent need to ensure traceability of crypto-asset transfers, the Council in its position aims to synchronise the application of the proposal on transfer of funds and the market in crypto-assets regulation (MiCA).

This proposal is part of a package of legislative proposals to strengthen the EU's anti-money laundering and countering terrorism financing (AML/CFT) rules, presented by the Commission on 20 July 2021. The package also includes a proposal to create a new EU authority to fight money laundering.

This proposal aligns EU legislation with key standards of the Financial Action Task Force.