FameEX Hot Topics | EU Parliament Adopts Stricter Regulations to Counter Money Laundering and Terrorist Financing

European Union (EU) lawmakers have recently approved three new draft legislations as part of the Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) package. These include the establishment of a new enforcement agency, a €1,000 ($1,088) cap on anonymous digital currency transactions, and a ban on citizenship by investment, also known as “golden” passports and visas.

The three approved drafts are:
The EU “single rulebook” regulation, which provides provisions for customer due diligence, transparency of beneficial owners, restrictions on the use of anonymous instruments such as digital assets, and a ban on “golden” passports and visas. This draft passed with 99 votes in favor, 8 against, and 6 abstentions.

The 6th Anti-Money Laundering Directive, which focuses on supervision and Financial Intelligence Units to promote EU-wide information sharing on AML/CTF matters. The text was approved with 107 votes in favor, 5 against, and no abstentions.

The regulation establishing the European Anti-Money Laundering Authority (AMLA), which will possess supervisory and investigative powers to ensure compliance with AML/CFT requirements. This draft was adopted with 102 votes in favor, 11 against, and 2 abstentions.

AMLA is considered the "heart" of the legislative package, designed to transform AML/CFT supervision within the EU by offering a central authority to coordinate national authorities and improve analytical capacity concerning illicit money and asset flows. A crucial aspect of the "single rulebook" bill is the €1,000 ($1,088) cap on anonymous digital asset payments. The draft also aims to limit cash transactions to €7,000 ($7,613) when the sender's identity cannot be confirmed.

Co-rapporteur for the Anti-Money Laundering Authority, Eva Maria Poptcheva, highlighted the importance of the new measures: “The EU’s hands-off approach towards dirty money has only yielded scandals. The time has come for a crackdown. AMLA is the game-changer we needed, and with it, the EU can end the economic nationalism that has fueled this laundromat.” When enforced, the new AML/CFT rules and the AMLA will extend to the entire digital asset sector in Europe, requiring all crypto-asset service providers (CASPs) to conduct extensive due diligence on their customers. The AML/CFT package was initially proposed in July 2021, with the EU agreeing on its preliminary position in December 2022. The legislation then proceeded to trialogue negotiations with the European Parliament.

The draft AML/CFT bills offer insight into the EU's current stance on digital assets, as the comprehensive Markets in Crypto Assets (MiCA) regulation is set for its final vote in April. MiCA includes new classifications for different digital assets, tailored regulatory regimes, proof-of-funds requirements for stablecoin issuers, and a requirement for companies seeking to issue digital assets to publish a project white paper. MiCA regulation is expected to pass its vote and likely come into force in early 2024.

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