European Parliament Passes Historic Anti-Money Laundering Rules for Crypto Industry – More Regulation Incoming?

The European Parliament on Tuesday approved new rules that aim to prevent crypto from being used for money laundering purposes.

The most important part of the new legislation for crypto users is a new €1,000 ($1,080) cap on anonymous crypto transactions, meaning transactions that are made between self-hosted wallets where the user cannot be identified.

Stricter EU rules to close existing gaps in combating money laundering, terrorist financing and evasion of sanctions have been approved by Parliament's economic and monetary affairs and civil liberties, justice and home affairs committees. Press release: https://t.co/5MgjOFRtSl pic.twitter.com/qy0jJON0Gg

— European Parliament (@Europarl_EN) March 28, 2023

“[…] entities, such as banks, assets and crypto assets managers, real and virtual estate agents and high-level professional football clubs, will be required to verify their customers’ identity, what they own and who controls the company,” a press release from the European Parliament said.

It added that the same companies would also need to collect information from their customers and submit this data in a centralized database:

“They will also have to establish detailed types of risk of money laundering and terrorist financing in their sector of activity, and transmit the relevant information to a central register.”

99 lawmakers in the EU Parliament’s Economics and Civil Liberties committees voted in favor of the legislation, while just eight voted against it.

In addition to the new rules on crypto, the legislation also includes a ban on cash payments to businesses of more than €7,000 ($7,600), as well as bans on citizenship and residency by investment schemes (known as “golden passports” and “golden visas”).

The legislation will still need the approval of the European Council before it becomes law.

EU lawmakers are known to take a tough stance on crypto and have, in the past, proposed legislation to better monitor decentralized finance (DeFi) activity. 

The EU has also recently implemented MiCA, which acts as a strict regulatory framework for the entire crypto and stablecoin sector in Europe.