Crypto Companies Face Imminent Regulation Alerts from EU's Anti-Money Laundering Body
The European Union has announced a series of **stringent Anti-Money Laundering (AML) regulations** for crypto exchanges and service providers, effective from July 2027. These new rules aim to tighten crypto oversight across all EU member states and address issues arising from previous frameworks like MiCA.
Key provisions of the new AML regulations include:
1. **Ban on Anonymous Wallets:** Crypto platforms will no longer support wallets that do not disclose the owner’s identity, effectively banning anonymous wallets. This measure aims to close loopholes facilitating money laundering or terrorist financing.
2. **Prohibition of Privacy Coins:** Cryptocurrencies designed to enhance user privacy (privacy coins) will be banned on these platforms due to their anonymization features posing challenges for AML efforts.
3. **Direct Government Access to Account Data:** Crypto firms will be required to grant EU authorities direct, real-time, and unfiltered access to user account data upon request. This will enable regulators to conduct more efficient investigations into illicit activities.
4. **Enhanced Scrutiny of Beneficial Owners:** Crypto exchanges and service providers must identify and verify the beneficial owners and shareholders of their companies to ensure they are not involved in criminal activities.
The European Union's Anti-Money Laundering Authority (AMLA) is responsible for enforcing these regulations uniformly across the 27 EU member countries. AMLA, which became operational recently, aims to reduce fragmented oversight and inconsistent AML applications across the bloc.
Bruna Szego, AMLA’s chair, emphasized the importance of these enhanced measures given the risks posed by crypto anonymity and fragmented national regulations. The regulations will impose a comprehensive control structure on crypto companies, including exchanges, custodial wallet providers, and crypto ATMs, facilitating transparency and accountability.
While these measures mark a departure from earlier EU policy that was more focused on market regulation, they align with a wider global trend of stricter crypto regulation. However, they contrast with the relatively more crypto-friendly stance taken by jurisdictions like the United States, potentially influencing the geographic distribution of crypto businesses in the future.
Legitimate firms in the crypto space are advised to be ready to meet the AMLA's requirements in each jurisdiction they operate in, as these may vary depending on the specific EU country. Crypto firms are also required to provide direct government access to account data by July 2027.
Notably, Binance, a crypto firm, was fined €3.3 million by the Netherlands' central bank in July 2022 for failing to follow its AML registration process. French authorities also opened an anti-money laundering probe into Binance in January 2025, amid suspicions of terrorist financing, including drug trafficking and tax fraud.
The UK's Financial Conduct Authority (FCA) also adopts a stringent approach towards cryptocurrency AML, similar to the EU's AMLA. However, concerns remain about inconsistent controls between different EU countries in the crypto market.
These changes represent some of the most comprehensive AML regulations targeting the crypto sector globally, signaling the EU’s commitment to protecting its financial system from crypto-enabled crime.
[1] Source: European Union's Anti-Money Laundering Authority (AMLA) website [2] Source: Financial Times [3] Source: Reuters [4] Source: CoinDesk
- The European Union's Anti-Money Laundering regulations for crypto exchanges and service providers, effective from July 2027, will ban anonymous wallets to close loopholes facilitating money laundering.
- Cryptocurrencies designed to enhance user privacy, known as privacy coins, will be prohibited on these platforms due to their anonymization features.
- Under the new regulations, crypto firms will be required to grant EU authorities direct, real-time, and unfiltered access to user account data upon request.
- Crypto exchanges and service providers must identify and verify the beneficial owners and shareholders of their companies to ensure they are not involved in criminal activities.
- The European Union's Anti-Money Laundering Authority (AMLA) is responsible for enforcing these regulations uniformly across all 27 EU member states.
- Binance, a crypto firm, was fined €3.3 million by the Netherlands' central bank in July 2022 for failing to follow its AML registration process.
- The UK's Financial Conduct Authority adopts a stringent approach towards cryptocurrency AML, similar to the EU's AMLA, but concerns remain about inconsistent controls between different EU countries in the crypto market.
- These comprehensive AML regulations targeting the crypto sector globally signify the EU’s commitment to protecting its financial system from crypto-enabled crime, and legitimate firms are advised to be ready for the changes.
