An agreement was reached between Parliament, Council and Commission on new rules to improve traceability of crypto-asset transfers. ECR MEP Assita Kanko was the Parliament's lead negotiator, together with MEP Ernest Urtasun (Greens), on the law, called the 'Transfer of Funds Regulation'.
Assita Kanko said,
“For too long, crypto-assets have been under the radar of our law enforcement authorities. For too long, terrorists have used crypto for fundraising, access to child pornography has been bought with crypto and criminals have laundered their proceeds through crypto. This has harmed the real lives of real people and placed question marks over the crypto sector as a whole.
“Today, we have taken a big step to address these problems. Misuse of crypto-assets will be much harder and innocent traders and investors will be better protected. The extension of the travel rule, which has existed for many years in traditional finance, to the crypto world, will make that world safer.”
The agreement extends the so called ‘travel rule’, which already applies to wire transfers (bank to bank) to transfers in crypto-assets. This means that the same information that banks have to send when performing an international transfer on behalf of a client will now have to be sent by crypto platforms as well. Peer-to-peer transactions are excluded from the rules. Crypto platforms will also have to comply with due diligence standards. They must know their clients and take reasonable measures to be able to recognize suspicious trading behaviour. Crypto platforms as well as banks are also instructed to have procedures in place to fully comply with sanctions, such as on Russian oligarchs and officials.
“The rules are proportionate. They do not ask the impossible of crypto platforms but rather reasonable measures to combat money laundering and terrorist financing. They are in line with international recommendations and legislation that is now being enforced in countries like Switzerland, Singapore and the United Kingdom.
“I am glad that the European Parliament, the Commission and the 27 national governments of our Member States were able to agree on this new law today.”
The Transfer of Funds Regulation is linked to the ‘Markets in Crypto-Assets’ Regulation which is currently also under negotiation. When in force, these two laws together will provide the regulatory framework for crypto trading in the European Internal Market.
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