European Union

European Union

Currently, there are no regulations applicable through all EU Member States, with the exception of the AMLD5, which brings cryptocurrency-fiat currency exchanges under the scope of EU anti-money laundering legislation, requiring exchanges to perform similar compliance obligations as financial institutions. In December 2020, AMLD6 came into effect: the directive made cryptocurrency compliance more stringent by adding cybercrime to the list of money laundering predicate offences.

In September 2020, the European Union started to be more proactive with the publication of the Digital Finance Package. The most comprehensive is the proposal for a Regulation on Markets in Crypto-Assets (MiCA). MiCA seeks to create a fully harmonised European market for virtual assets by establishing a legal taxonomy of virtual assets and defining rules for issuers and service providers.

On 20 July, the European Commission unveiled an anti-money laundering (AML) action plan that proposes to create an EU-wide AML supervisor that harmonises the 27 Member States’ AML regimes and extends anti-financial crime obligations to all virtual asset service providers (VASPs). This includes a proposed Regulation “on information accompanying transfers of funds and certain crypto-assets”. 

Scope of the Travel Rule

“Crypto assets service providers” as defined in article 3(1) MICA: 

(8) “any person whose occupation or business is the provision of one or more crypto-asset services to third parties on a professional basis;

(9) ‘crypto asset service’ means any of the services and activities listed below relating to any crypto-asset:

(a) the custody and administration of crypto assets on behalf of third parties;

(b) the operation of a trading platform for crypto assets;

(c) the exchange of crypto assets for fiat currency that is legal tender;

(d) the exchange of crypto assets for other crypto assets;

(e) the execution of orders for crypto assets on behalf of third parties;

(f) placing of crypto assets;

(g) the reception and transmission of orders for crypto assets on behalf of third parties

(h) providing advice on crypto assets”.

As explained in the Proposal for a Regulation of the European Parliament and of the Council on information accompanying transfers of funds and certain crypto assets (adapted edition);

If adopted, the Regulation will apply to “transfers of funds, in any currency, or crypto assets, which are sent or received by a payment service provider, a crypto-asset service provider, or an intermediary service provider established in the European Union” (Chapter 1, article 2, 4. c).

It does not apply to person-to-person transfer of crypto assets, nor when “both the payer and the payee are payment service providers or both the originator and the beneficiary are crypto-asset service providers acting on their behalf” (Chapter 1, article 2, 4. c).

Person-to-person transfer” is defined as “a transaction between natural persons acting, as consumers, for purposes other than trade, business or profession, without the use or involvement” of a VASP (Chapter 1, article 3, 14).

Supervisory body

Each Member State responsible Authority

New EU AML Authority - planned to be set up in 2023

Threshold

EUR 1000, information has to be exchanged but with less details:

  • Originator's name;

  • Originator's account number;

  • Beneficiary's name;

  • Beneficiary’s account number.

Information to be exchanged

  • Originator's name;

  • Originator's account number, where an account is used to process the transaction;

  • Originator’s address, official personal document number, customer identification number or date and place of birth.

  • Beneficiary's name;

  • Beneficiary's account number, where such an account exists and is used to process the transaction.

When do you need to comply?

As soon as the regulation is adopted. Also, it is always good to be prepared and proactive and start speaking to Travel Rule compliance implementation providers.

Applicable regulation

Digital Finance Package

Proposal for a Regulation of the European Parliament and the Council on Markets in Crypto-assets, and amending the Directive (EU) 2019/1937

Proposal for a Regulation of the European Parliament and the Council on information accompanying transfers of funds and certain crypto-assets

New AML Package

MLRs

Written by:
Delphine Forma
Delphine Forma
Senior Compliance Manager at BitMEX

Delphine Forma is an experienced compliance officer who worked across different industries including Bank of Tokyo, Mitsubishi UFJ, HSBC Bank, and crypto businesses (exchanges and miners). She holds a diploma from Sciences Po Lyon, and two masters specialising in European Criminal Business Law and Frauds and Money Laundering Prevention. Delphine is a board member of the OpenVASP Association.

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