The European Commission (EC) introduced a proposal that would prohibit the use of “anonymous crypto asset wallets” as part of its fight on financial crimes. The proposal would expand EU anti-money laundering and countering terrorism financing (AML/CFT) rules to the crypto sector, the commission said, because “only certain categories of crypto-asset service providers” are currently subject to them.
“Today’s amendments will ensure full traceability of crypto-asset transfers, such as Bitcoin,” the European Commission said, “and will allow for prevention and detection of their possible use for money laundering or terrorism financing.”
This announcement came shortly after UK police action confiscated nearly $408 million worth of cryptocurrency as part of an ongoing money laundering investigation. Apparently there are similar operations in the EU and other regions.
The released document has more in-depth details regarding the changes. Many of the changes make specific references to crypto assets within the existing regulations, without applying further modifications.
There are some notable additions, such as requiring “other means ensuring that the transfer of crypto-assets can be individually identified and that the originator and beneficiary address identifiers are recorded on the distributed ledger” for transactions, lacking traditional payment account numbers and identifiers.
The revision also said, “the requirements of this Regulation should apply to crypto-asset service providers whenever their transactions involve a traditional wire transfer, or a transfer of crypto-assets involving a crypto-asset service provider.”
Those requirements include the following:
“The crypto-asset service provider of the originator should ensure that transfers of crypto-assets are accompanied by the name of the originator, the originator’s account number, where such an account exists and is used to process the transaction, and the originator’s address, official personal document number, customer identification number or date and place of birth. In addition, the crypto-asset service provider of the originator should also ensure that transfers of crypto-assets are accompanied by the name of the beneficiary and the beneficiary’s account number, where such an account exists and is used to process the transaction.”
Similar requirements were made of the beneficiary’s service provider but in the opposite direction. (Meaning those service providers are required to make sure all the relevant information was provided by the originator’s service provider.
For the proposal to succeed, it must be approved by the EU’s member states and the European Parliament members in order to become a legitimate law. This process could take up to two years which gives investors a while to prepare.
