EU officials agrees to track crypto transfers

The Council of the European Union announced that it has reached an interim agreement to combat money laundering and terrorist financing through cryptocurrencies.

Among other things, the proposal provides that digital asset companies will have to verify the identities of their customers to track cryptocurrency transfers.

In addition, the new rules provide for the reporting of suspicious transactions by crypto service providers to regulators.

EU targets cryptocurrencies in new deal

According to an announcement by the European Parliament and the Council of the EU, they will create an Anti-Money Laundering Authority (AMLA) for this purpose.

AMLA will oversee “high risk and cross-border financial entities”. This includes, for example, digital asset companies that they consider “risky”.

The idea is to be able to identify who is behind each of the transactions. That’s what Ernest Urtasun, the Spanish legislator who helped lead the measure:

“The new rules will allow authorities to link certain transfers to criminal activities and thus identify the real person behind them.”

On his Twitter account, the member of the European Parliament published a “thread” commenting on the EU agreement. According to him, EU members agreed to the “most ambitious travel rule for the world’s crypto asset transfers”.

According to Urtasun, the new rules put an end to what he called the “wild west” of digital assets.

Rules include crypto wallets

Urtasun said the new EU rules will not apply to P2P transfers. After all, this type of transaction does not involve a company.

But on the other hand, the rules will apply to “non-hosted” cryptocurrency wallets. That is, those that users maintain independently of exchanges, for example. Urtasun said that, in this case, the rules will be valid for transactions over 1,000.

“Verification of the identity of the beneficial owner of the unhosted wallet will be mandatory for large transfers above €1000 in case the transfer takes place to or from the wallet that belongs to the CASP client itself [Crypto Asset Services Provider]”, he said.

In a timely manner, Urtasun said that CASPs, such as crypto exchanges, for example, will have to adopt internal policies and controls. This is all to ensure they comply with EU financial sanctions. He cited the case of Russia that uses digital currencies to circumvent sanctions:

“This is very relevant. After all, Russian oligarchs use cryptocurrencies to circumvent EU and international sanctions,” he said.

When members write the rules, they will still need approval from various bodies. Only then will they take effect. This is expected to happen by the year 2024.