EU’s AML Agency Would Supervise Cryptocurrency, More Banks Under Latest Plan

By Gabriel Vedrenne

EU nations want an impending bloc-wide anti-money laundering regulator to directly supervise all manner of financial institutions, including virtual asset service providers, or VASPs, and monitor at least one bank or other AML-regulated company in each country.

The European Commission, the EU’s executive branch, proposed last year to bolster the bloc’s defenses against illicit finance, including by launching a new Anti-Money Laundering Authority, or AMLA, to directly monitor a “limited number” of larger, systemically important financial institutions that operate across borders beginning in 2026.

European lawmakers argued in a preliminary report this month that AMLA’s supervisory remit should apply to more banks by focusing less on size and more on risk, and cover certain cryptocurrency exchanges and other VASPs as well.

The European Council, which represents the bloc’s 27 national governments, endorsed the view of lawmakers Wednesday, specifically by proposing to strike the Commission’s plan to subject “only large, complex financial groups present” in at least eight EU nations to direct supervision.

AMLA should instead view each individual institution’s “inherent risk” as the overriding factor during the first round of selection, regardless of how many jurisdictions in which they operate, then develop a list of “residual risk benchmarks based on objective and comparable criteria” to govern future rounds, the Council said.

To prevent countries without large banks from escaping AMLA altogether, the Council also wants to require the agency to directly monitor at least one domestic financial institution or local subsidiary of a foreign-headquartered institution in every EU nation.

Jo Swyngedouw, head of AML supervision and banking prudential policy at the National Bank of Belgium, said that such a requirement does not comport with the Council’s preference for a risk-based approach to supervision in principle, but would not prove difficult to implement as several large financial groups operate across the EU.

“It is above all a political signal that no country will be forgotten by AMLA, and a confirmation that member states are supporting the new agency,” Swyngedouw told ACAMS

EU lawmakers and the Council separately agreed Wednesday to move forward with extending the “travel rule” to cover any payment made in Bitcoin or some other cryptocurrency, at any amount, with no exemptions.

Banks, broker-dealers and other companies already subject to the travel rule must log and share the names, addresses and account numbers of the originators and beneficiaries of payments, but only those that equal or exceed €1,000.

Payments between decentralized, “un-hosted” digital wallets and wallets at centralized, regulated cryptocurrency exchanges will also trigger the travel rule under the plan.

Within hours of the agreement, the Financial Action Task Force, an intergovernmental group that sets global AML standards, warned that most nations have lagged behind in implementing the travel rule over the past year.

“Out of 98 jurisdictions, only 29 have passed relevant travel rule laws, and a small subset of these jurisdictions have started enforcement,” FATF noted Wednesday “This demonstrates an urgent need for jurisdictions to accelerate implementation and enforcement to mitigate criminal and terrorist misuse of virtual assets.”

Contact Gabriel Vedrenne at

Topics : Anti-money laundering , Counterterrorist Financing , Cryptocurrencies
Source: European Union
Document Date: June 30, 2022