EBA Proposes Stricter Anti-Money Laundering Rules Amid Binance’s DOJ Settlement

In a bid to enhance anti-money laundering (AML) and combat the financing of terrorism (CFT) standards within the crypto industry, the European Banking Authority (EBA) has initiated a public consultation on proposed guidelines. Meanwhile, released on November 24, these guidelines aim to address the evolving challenges faced by crypto-asset service providers (CASPs) and payment service providers (PSPs) in complying with AML/CFT regulations.

Notably, the EBA’s move underscores the need for a comprehensive regulatory framework in the rapidly evolving crypto landscape.

EBA Seeks Stricter AML/CFT Compliance from Crypto Providers

According to a recent report, the European Banking Authority (EBA) has identified gaps in the current regulatory framework governing AML/CFT standards compliance among crypto providers. Considering that, they have proposed new guidelines, open for public consultation until February 26, 2024, which specifically target CASPs and PSPs.

Notably, the EBA suggests merging AML/CFT criteria for both, emphasizing a unified approach to strengthen the regulatory environment. The EBA’s proposed guidelines outline key measures to fortify AML/CFT controls.

For instance, it recommends that CASPs enhance the interoperability of their protocols, ensuring seamless transmission of information. In addition, CASPs would be mandated to obtain and hold information on self-hosted addresses, enhancing traceability and identification of crypto transfers.

It’s worth noting that the guidelines set a threshold of €1000 for scrutinizing self-hosted addresses, although the frequency of this assessment remains unspecified.

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Regulatory Focus Amid Binance’s Regulatory Challenge

Recently, the EBA urged stablecoin issuers to voluntarily adhere to specific guiding principles related to risk management and consumer protection. Notably, this move signals the regulator’s commitment to fostering a robust and compliant crypto ecosystem.

However, with the crypto industry continuing to mature, regulatory bodies worldwide are grappling with the imperative to strike a balance between innovation and safeguarding against financial crimes. Considering that, the EBA’s newly proposed guidelines represent a pivotal step in achieving this delicate equilibrium, paving the way for a more secure and regulated crypto landscape.

Meanwhile, in the latest development, Binance, the world’s leading cryptocurrency exchange in terms of trading volume, faced sanctions from the Department of Justice (DoJ) for allegedly violating anti-money laundering (AML) laws.

The Department of Justice revealed that it had been investigating Binance for the past five years, examining accusations related to money laundering, illicit money transfers, and violations of criminal penalties.

Responding to these serious allegations, Binance’s CEO Changpeng Zhao took a significant step by resigning from his position. Additionally, Zhao personally entered a guilty plea to charges of neglecting to establish an effective anti-money laundering system, as disclosed by the Department of Justice.

Meanwhile, after the consultation process concludes, the anticipated effective date for the new guidelines is December 30, 2024. The move aligns with the EBA’s ongoing efforts to adapt regulatory frameworks to the dynamic crypto landscape, echoing its recent consultation paper on the suitability of management and shareholders in crypto-related entities.

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