EU Seeks Anti-Money Laundering Regulator to Monitor Crypto Assets

Key Insights

• • The European Union is planning to give its new anti-money laundering watchdog power to regulate crypto assets
  • The regulatory body is set to be launched in 2024 and will oversee financial crimes, including terrorist financing and money laundering
  • With a rise in crypto adoption, crypto-related crimes too have been on a rise

In hopes of bolstering crypto oversight efforts, the European Union is giving its new anti-money laundering watchdog more power to oversee the crypto-verse. In addition, the EU aims to lift its efforts in the space due to concerns around crypto usage in illicit funding and transactions.

Tightening Grip Around Cryptos

The European Union plans to lift the powers of its planned anti-money laundering and terrorist financing watchdog in terms of oversight over crypto asset businesses. Two years later, the designed authority will be launched in 2024 and fully operational by 2026.

Reportedly, an EU diplomat cited by news organizations and was quoted as saying that ‘Germany is leading a group of states that want to make the inclusion of crypto companies within the watchdog’s scope of activities more extensive.’

Apart from Germany, other nations that are part of this group include Austria, Italy, Luxembourg, Spain, and The Netherlands.

It has been revealed in reports that the six-member states seek to cover cryptocurrency service providers with the activities of the designed watchdog, which is to be named the ‘Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA).’

The new body will also oversee banks, financial institutions, and crypto-asset-related firms.

A leading lawmaker for the proposal, Luis Garicano, said:

“It is key that the scope of the new EU authority explicitly includes crypto-assets, given that this is one of the fields more prone to money laundering activities.”

Crypto Regulations Strengthening in Europe

In November last year, the European Council adopted its position on the Markets in Crypto Assets (MiCA) framework, stating that the Council and the European Parliament can now negotiate the proposal before it is formally adopted as law.

This agreement also formed the Council’s negotiating mandate for discussing MiCA with the European Parliament.

Meanwhile, released last July, the European Commission’s proposal only briefly mentioned ‘virtual assets.’ The proposal said:

“The competencies of the Authority in the area of virtual assets are coherent with the Digital Finance Package published by the Commission on 24 September 2020.”

As per officials, it is unclear how members will support the motion or how crypto firms will be treated since the proposed changes are yet to be formally discussed among EU member states.

As crypto adoption grows, regulators across the globe have increasingly turned their attention to the growing space. Recently, a Chainalysis report showed that crypto-related crime hit an all-time high of $14 billion in 2021. However, the high crime rate represented a lower per capita portion of crypto usage with growing adoption.

That said, at press time, the top crypto assets like Bitcoin and Ethereum noted minor gains of 2% and 3%, respectively.