To bolster Anti-Money Laundering (AML) efforts, the European Banking Authority (EBA) has broadened the scope of the Travel Rules guidelines to encompass crypto service providers and their middlemen. Effective December 30, crypto exchanges within the EU must adhere to Regulation (EU) 2023/1113, mandating the reporting of details regarding fund and crypto asset transfers. Additionally, Crypto asset service providers (CASPs) fall under the purview of the EU’s Markets in Crypto-Assets Regulation (MiCA), subjecting them to the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) framework.
Payment service providers (PSPs), intermediary PSPs, CASPs, and intermediary CASPs are given a two-month window to confirm their compliance with the updated regulations. Notably, crypto service providers are obligated to gather user information for both fund and crypto transfers, identify service-linked transactions, and detect interconnected transfers. Furthermore, they are required to disclose their approaches concerning multi-intermediation and cross-border transfers.
The EBA acknowledges the financial strain that crypto exchanges and service providers may encounter as they strive to meet the EU Travel Rule guidance. Nonetheless, the regulatory body highlights a positive aspect, stating, “On the whole, the benefits anticipated from these guidelines are likely to outweigh prospective costs, thus aiding in the more efficient combat against money laundering and terrorist financing.”
Crypto exchanges and service providers subject to the EU’s Anti-Money Laundering Directive (AMLD) or a domestic AML/CFT regimen must continue adhering to relevant AML/CFT stipulations. Concurrently, as global authorities tighten regulations aimed at crypto exchanges, crypto protocols are actively engaged in compliance initiatives. In a notable move in March, Binance, the world’s largest crypto exchange, aligned with the Global Travel Rule alliance to combat financial crimes, such as money laundering and terrorist financing.
In another development, the Financial Intelligence Unit (FIU) has intensified Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) compliance measures for crypto exchanges in India.