Thomas GretherSuspicious transactions abound. According to estimates, money laundering within Europe amounts to several hundred billion euros, according to the European Court of Auditors. This is linked to arms trafficking, drug dealing and forced prostitution. Now the EU wants to put a stop to money laundering with a new monitoring authority Alma (Anti Money Laundering Authority).
New laws for crypto businesses
In July 2021, the European Union (EU) unveiled a slew of new legislative proposals. With them, it wants to strengthen the fight against money laundering and against the financing of terrorism. Tougher regulations will apply to virtual currencies à la Ripple, Ethereum or Bitcoin in the future. The European Commission expects to be able to track crypto transfers until the transfer is completed. Measures include the following:
- Thus, operators of exchange offices and other service providers who work with cryptocurrencies must monitor their clientele.
- The usual due diligence for financial institutions must be maintained.
- This includes the obligation to report suspicious cases.
- In addition, the user identity as well as their wallet addresses should be stored in a central database.
Ban anonymous crypto wallets
The reform is introduced with the aim of applying the already existing regulations to the entire crypto sector. In addition, all crypto providers will have to undergo the applicable identification requirements. The EU wants to ban anonymous crypto wallets altogether.
Last year, the Commission of the European Union moved forward. Namely, with the draft regulation for crypto-value-based markets. It pushed ahead with the rewrite of the legal framework. The regulations enshrined in the amendment are to apply to token issuers and service providers. Namely, to those who intend to apply for a license for the EU single market.
Crypto service providers under obligation
The previous legislative regulations on money laundering only cover cryptocurrency exchanges. Now they are to apply to service providers as well. What already applies to e-money issuers and payment service providers is now to apply to all EU member states with the new regulations. The EU wants to give the member states more comprehensive options to hold providers of crypto services accountable. If they have their headquarters in another EU country, they can now be obliged to designate a central contact point for official deliveries, for example. This is already the case for e-money issuers and payment service providers.
That is:
- Providers who carry out crypto-money transfers must collect detailed data.
- And this applies to all actors involved in the crypto transfer, especially the originator and beneficiary.
- Authorities should be able to view the collected data.
- In order to concretely cast this plan into a law, a reform of the regulation on money transfers adopted in 2015 is planned.
Problems with data protection?
The EU emphasizes that it does not want to rein in the rapidly growing virtual currency sector with stricter regulations. After all, it wants to join this growing market itself by means of a digital euro. But legal scholars warn that the new EU money laundering directive will lead to problems with data protection. In the future, payment transactions will be almost completely monitored. This is because transaction data can be stored for decades. But the harmonized regulations in the EU area also bring advantages: The crypto industry gains much more legal certainty.
Alma – the new money laundering supervisory authority
The draft laws are to be followed by the newly created EU authority Alma (Anti Money Laundering Authority) to combat money laundering (see box). The European Commission’s plans have met with mixed reactions in the European Parliament. CSU MEP Markus Ferber is positive about the plan to set up a new surveillance authority. “We have seen that the European Banking Authority is overburdened with money laundering supervision,” he told media.
What is the function and task of "Alma"?
Alma (Anti Money Laundering Authority) is the name given by the EU to its new lead anti-money laundering authority. As a supervisory authority in the EU, Alma is to facilitate, coordinate and promote cooperation between the individual Financial Intelligence Units (FIUs). In doing so, the EU aims to better analyze and combat illicit cross-border financial flows. Alma is to lead the oversight of certain financial firms where there is an increased risk of money laundering or terrorist financing. Alma's governing body is to be staffed by six independent experts, thus limiting the influence of member states. Alma is a transnational project within the EU and part of a current legislative overhaul that includes new EU regulations on money laundering.
