CrypTech Writings: EU regulators offer detailed parameters for ‘serious’ AML breaches that could result in the loss of a banking, MSB or crypto exchange license

The ACFCS CrypTech Writings Series offers key updates on crypto, fintech, compliance and related regulation ruminations, tips, trends and more 

By Brian Monroe
bmonroe@acfcs.org 
June 1, 2022

This session’s insights on a must-read report from several top EU regulatory bodies comes from the prolific and proficient Ari Redbord, Head of Legal and Government Affairs at TRM Labs, the blockchain intelligence company.

Prior to joining TRM, he was the Senior Advisor to the Deputy Secretary and the Undersecretary for Terrorism and Financial Intelligence at the United States Treasury

To read Redbord’s original post and be part of the conversation, click here.️ 

Today, a group of EU regulators published a joint report, providing a comprehensive analysis of what a #cryptocurrency business would have to do in order to lose its licensing status under EU law.

What happened: Specifically, the report called for, as a last resort, “withdrawal of license for serious breaches of the rules on anti-money laundering and countering the financing of terrorism (AML/CFT).”

Could a bank or crypto firm really lose its license for AML failings?

Yes.

But first, the joint Report also calls for the “inclusion of assessments by competent authorities of the adequacy of the arrangements and processes to ensure AML/CFT compliance as one condition for granting authorisation or registration.”

For this purpose, cooperation and information exchange between prudential supervisors and AML/CFT supervisors should be ensured.

The bigger picture: The recommendation comes as lawmakers speed toward ratifying the landmark legislation known as the Markets in Crypto Assets Regulation (MiCA) which introduces a passportable licensing regime for the 27-nation bloc.

To date, EU policy makers have mostly relied on guidance from the Financial Action Task Force – the AML/CFT standard setting body – for its anti-money laundering framework.

According to Coindesk, “One of the remaining wrinkles in the legislation concerns whether it should include stronger AML controls, or leave the issue for a separate, wider review of dirty money rules.”