An EU group is reportedly lobbying for the creation of an AML agency to oversee cryptospace. Concerns that businesses dealing in digital assets could become involved in illegal funds processing are behind the decision.
Germany Leading the Push to Put Crypto Firms under EU Anti Money Laundering Supervision
Many EU member countries, headed by Germany, are asking the European Union to create an anti-money laundering watchdog to supervise businesses within the crypto sector. Bloomberg cited knowledgeable sources who said these nations are concerned that crypto companies may be used to obtain illegal funds.
EU officials, including the European Commission, are currently negotiating the design of the regulator. It is expected that it will launch in 2024, and then expand in the following two years. Said group is seeking to ensure a more explicit inclusion of crypto firms in the watchdog’s responsibilities, according to an EU diplomat who, like the other sources for the article, chose to remain anonymous.
The European Union is preparing to establish the new agency after a series of scandals in recent years which exposed gaps in the bloc’s regulatory framework allowing flows of dirty money. The booming cryptocurrency market is opening up a new avenue for law enforcement, as it appears that the anonymity of digital assets attracts criminals and other rogue states.
The initiative is being supported by the Netherlands, Spain, Austria and Italy as well as Luxembourg, Luxembourg, Luxembourg and Luxembourg. They insist that the new European watchdog’s remit should cover the riskiest cross-border entities among banks, other financial institutions, and crypto service providers, the diplomat unveiled. The EC’s proposal from July 2021 only indirectly refers to “virtual assets.”
The executive committee declined to comment, and members states have yet to consider the idea. The quoted officials remarked that it’s still unclear whether the changes are going to win wide support. The European Parliament, however, will make the final decisions on the legal documents. Luis Garicano is a prominent EU lawmaker who supported the proposal.
Because crypto assets is prone to money laundering it is crucial that they are included in the EU’s scope.
Currently, money laundering is a matter for the EU’s national authorities. This limits their effectiveness as well raises doubts about their independence. Europe’s financial system has been involved in several major scandals in the past decade, including the laundering of Russian money through Danske Bank’s Baltic operations and Latvia’s ABLV Bank.
Chainalysis, a blockchain-forensics firm that tracks transactions on the blockchain claims that illicit transactions rose by as much as 80% last year to an unprecedented $14 billion. But crime-related transactions still make up a tiny portion of total crypto transaction volume, which is expected to increase significantly in 2021.
What do you think? Will other EU countries support this initiative by the German-led group. Comment below to let us know your thoughts.
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