EU to set up new agency to crack down on crypto transactions and money laundering

The European Union will propose a new agency for combating money laundering and new rules for crypto-related transactions.

Crypto service providers to disclose users’ data 

The European Commission plans to establish a new anti-money laundering authority (AMLA), which would involve national authorities to become the “centerpiece” of an integrated supervisory system.

Currently, the bloc has depended on the national regulatory agency members to enforce AML regulations since the EU lacks an anti-money laundering agency that oversees Europe.

According to a Reuters report, AML efforts have not been satisfactory, and the bloc is preparing to address money laundering, terrorist financing and organized crime at the Union level with a new authority.

The EU’s rules for financial services currently do not include transfers of cryptocurrencies. This could leave holders of digital assets exposed to risks related to money laundering and terrorist financing, according to the documents obtained by Reuters.

Cryptocurrency service providers would need to collect and disclose data with the agency regarding the senders and receivers of digital asset transfers. This procedure is currently outside the scope of EU rules in the financial services industry.

Ultimately, the European Parliament and states will hold the final decision on the proposed rules, said Sven Giegold, a Green Party member of the Parliament. He added that the EU should consider taking legal action against states in the Union that are not enforcing AML consistently.

The Union has been incentivized to strengthen guidelines on money laundering issues due to a Danish bank scandal that lasted between 2007 until 2015. 

Denmark’s biggest lender, Danske Bank, has fallen from being one of Europe’s most respected financial institutions to getting itself caught in the web of one of the world history’s largest money-laundering scandals. $235 billion of suspicious transactions went through an Estonian branch of Danske Bank. 

Previously, EU regulators have warned investors about the risks associated with cryptocurrencies. The European Securities & Markets Authority’s report published in March stated that digital assets are highly risky and speculative. 

The agency added that investors could lose everything in the largely unregulated market, and with Bitcoin recording a new all-time high earlier this year, the report cited that the new asset class posed “significant risks.”