Europe votes to crack down on anonymous crypto transfers

By on April 1, 2022 0

European Union lawmakers have imposed stricter rules requiring crypto transfers to be traceable, just like electronic money transfers.

The proposed new rules require crypto service providers to maintain identity records about the sender and recipient of encryption transfers and make the records available to “competent authorities.”

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They are part of an EU Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) package in response to a European Commission (EC) proposal on AML /CTF presented last July. The EC wanted to ban anonymous crypto wallets.

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MEPs want the European Banking Authority (EBA) to create a public register of crypto providers that pose a high risk of violating AML/CTF rules, as well as a “non-exhaustive list of non-compliant providers”.

“Before making crypto-assets available to recipients, providers should verify that the source of the asset is not subject to restrictive measures and that there are no money laundering risks. or terrorist financing,” they said.

MEPs from the Committee on Economic and Monetary Affairs (ECON) and the Committee on Civil Liberties (LIBE) voted on the text of the legislation on Thursday, with 93 votes in favor, 14 against and 14 abstentions. It will be put to the vote during the plenary session of the European Parliament in April.

“Illicit flows of crypto-assets move largely undetected across Europe and the world, making them an ideal instrument to ensure anonymity,” said Ernest Urtasun, Vice President of the Greens/ European Free Alliance in Spain and co-rapporteur for ECON, in a statement.

Urtusan noted key changes to the EC proposal, including removing a minimum threshold of €1,000 for monitoring wire transfers, as criminals conduct crypto transactions differently.

“Criminals use small amount transfers to conceal large (smurf) transactions. Multiple small transfers can be made automatically using multiple dispersed addresses. Criminal activities such as fraud, scams, hacks, terrorist financing can be made with small amounts.” he explained on Twitter.

The public registry aims to help providers identify non-compliant entities, high-risk service providers in crypto-assets, services such as crypto mixers and cups, and crypto-asset wallets linked to criminal activity. .

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Regarding privacy protection, Urtusan notes: “No information will be included in the transfer itself or transmitted to the counterparty if there is a risk that this counterparty will not be able to protect the confidentiality of the data. We clarify the period and conditions for data retention.

Additionally, transfers to and from non-hosted wallets will be subject to traceability rules and reporting, and identity information will need to be verified.

Earlier in the week, Coinbase Chief Legal Officer Paul Grewal said law enforcement can already track and trace digital asset transfers with advanced analytics tools and said none of that necessitated upsetting established expectations of portfolio holder privacy.

Coinbase described it as a “vote critical of the EU” and Grewal warned: “If passed, this review would trigger an entire surveillance regime on exchanges like Coinbase, stifle innovation and undermine self-serving wallets. that individuals use to securely protect their digital assets. .”