Brussels (Brussels Morning) The EU is designing yet another set of legislative proposals to deter anti-money laundering in the EU, including modified rules for crypto-asset transactions and the creation of an EU watchdog to deal with these criminal activities.
The proposal looking at regulating crypto-asset transfers is part of a package of legislative measures to strengthen the EU’s anti-money laundering and countering terrorism financing rules, presented by the European Commission on July 2021.
“Crypto-assets are more and more at risk of being exploited for money laundering and criminal purposes, and I’m glad the Council could make swift progress on this urgent proposal”, said Andrej Šircelj, Slovenian Minister for Finance on behalf of the Council, on December 1, after agreeing on a mandate to negotiate with the Parliament existing rules on information associated with the transfer of funds.
With the proposal, the EU wants to introduce an obligation for crypto-asset service providers to collect and make accessible full information about the sender and beneficiary of the transfers of virtual or crypto assets they operate.
The purpose is to ensure traceability of crypto-asset transfers, so as to be able to better identify possible suspicious transactions and if necessary blocking them, the Council said.
Details of the full legislative package were presented at a Parliament’s hearing, on December 1, by Raluca Pruna, head of the Financial Crime at the Commission. During the session, MEPs largely welcomed the package, having raised many questions about its details, including crypto-assets over real estate or whether an assessment had been conducted to determine that the prohibition of cash payments over 10,000 euros is an effective measure.
They also asked if fragmentation could result from the package, which contains proposals for both regulations and directives, and questioned its decentralized enforcement.
“The agreement is an important step towards closing the gaps in our financial systems that are malevolently used by criminals to launder unlawful gains or finance terrorist activities”, stated Šircelj, congratulating the Council and the Parliament.
“The new package that the Commission has proposed gives us an important opportunity to harmonise the rules concerning anti-money laundering. This is a strong tool, but only if the European Parliament and Council avoid watering it down in the negotiations”, Roland Papp, Senior Policy Officer at Transparency International EU told Brussels Morning.
Weak national capacity
During the Parliament hearing, the European Court of Auditors (ECA)’s Mihails Kozlovs observed that EU bodies currently have limited means to enforce anti-money laundering rules on the national level, leading to a poor coordination and slow responses.
Kozlovs referred to the ECA’s report describing how EU efforts to fight money laundering in the banking sector are fragmented and its implementation is insufficient.
Also addressing the Parliament hearing, Joshua Kirschenbaum, non-resident fellow at the German Marshall Fund and co-author of a Bruegel report on anti-money laundering measures, considered the Commission proposals “bold and necessary” but criticized the quantitative-only calculation of the risk of illicit funding in the proposal.
“The legislation should also lift any legal obstacles to proper information sharing between the new supervisor and its counterparts in the member states, including Financial Intelligence Units (FIUs)”, reads the Bruegel paper on how to properly legislate the upcoming EU watchdog.
From the Europol side, Burkhard Mühl, hoped that Europol’s capabilities could be fully used in connection with anti-money laundering while avoiding duplication. Mühl further said that the current proposals do not create strong linkages between law enforcement and other anti-money laundering actors.
“The are still some loopholes remaining in the Commission proposal, such as the registering beneficial ownership data, as well as the verification of this data. We, along with MEPs and the Council need to make sure these loops are closed, so that proper enforcement can happen”, Transparency International EU’s Senior Policy Officer added.