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Once implemented, the provisional agreement will make it mandatory for Crypto-Asset Service Providers (CASPs) to collect personal information on both the originator and beneficiary of a crypto transaction.
Unlike FATF’s Travel Rule, there is no minimum ceiling limit for the AML-check-provision to kick in.
P2P crypto transfers won’t be subject to AML checks under the provisional agreement.
After three months of discussions, EU Co-legislators finally agreed on AML measures to prevent the use of digital assets for money laundering and terrorism financing on Wednesday.
With this provisional agreement, Crypto-Asset Service Providers (CASPs) will be obligated to collect the personal information of the originator and beneficiary of crypto transactions, no matter the amount. This move will make crypto transactions traceable, which, in turn, will enable CASPs to flag and block suspicious transactions.
Interestingly, crypto transfers to unhosted wallets won’t be subject to AML checks, which is surprising as EU authorities had initially vouched for bringing both hosted & unhosted wallets under the regulatory purview. Industry players and experts were largely against such a move, terming it overregulation.
The backlash may have resulted in authorities backtracking from their initial stance of subjecting private wallets to AML checks. That said, the provisional agreement will also set specific guidelines for all transactions between CASPs and unhosted wallets.
As for data protection, general data protection regulation (GDPR) will continue to apply to crypto transactions. There won’t be any separate regulations for it. It basically means that only CASPs will be allowed to store the Travel Rule data, which will impact how some Travel Rule Solution Providers (TRSPs) work. And this is what separates Shyft Veriscope from the rest of the solutions available in the market.
After all, Veriscope has been designed in such a manner that the Travel Rule data isn’t stored in its system. Instead, the exchange of Travel Rule data exclusively happens between CASPs.
The co-legislators also agreed to sync the rollout of this provisional agreement with the EU-wide crypto regulation, Markets in Crypto Assets (MiCA).
Recently, European Central Bank President Christine Lagarde said in her testimony to the EU parliament that the Markets in Crypto Assets is likely to be implemented by 2024. Thus, the provisional EU AML agreement, which is in line with FATF’s Travel Rule, specifically Sections 4 & 5, too may be implemented in 2024.
The first proposal on EU-wide AML rules published under the title “Anti-money laundering and countering the financing of terrorism legislative package” in July 2021 also states that “the AML authority should be operational in 2024.”
Thus, the positive aspect behind the announcement is that CASPs will have a clear deadline to comply with EU AML regulations that aim to implement FATF’s Travel Rule within the boundaries of the 27-member bloc.
The first thing CASPs must do now is zero in on a Travel Rule Solution Provider (TRSP). And we have the best TRSP to suggest — Veriscope! It is the only solution that can tackle the “Sunrise Issue’’ effectively.