The European Parliament and the European Council have jointly agreed to establish a new Anti-Money Laundering Authority in Frankfurt. This decision follows the EU’s 2023 decision to oversee crypto firms and financial service providers operating internationally.
The EU has recognized the need for an anti-money laundering watchdog in light of increased scrutiny on the role of crypto companies in terrorist financing. The new agency will be based in Germany and is expected to have 400 staff members when it launches in 2025. Nine countries, including France, Italy, Spain, Latvia, and Ireland, have applied to host the agency.
The AMLA will require credit and financial institutions, as well as crypto asset service providers, to conduct customer due diligence. This includes verifying customer information and reporting any suspicious activity to the EU’s Financial Intelligence Units. It was noted by EU supervisory board member Elizabeth McCaul that assessing a firm’s global operations is crucial in accurately determining its financial health and risk level.
One example of this is Binance, which was investigated by French authorities for money laundering and later charged by the US for allowing terrorists to use its platform. However, a 2023 journal article published by Oxford Academic suggests that while cryptocurrency may be attractive to terrorists, it is difficult for them to convert it to major currencies.
The EU’s announcement of the AMLA has received backlash from the crypto community, with some accusing the EU of being involved in money laundering itself. This comes after the EU finalized its Markets in Crypto-Assets bill in April 2023, which will regulate cryptocurrencies and address issues such as new token issuances, anti-money laundering regulations, and stablecoin rules.
Institutions, such as French banking giant Societe Generale and USDC issuer Circle, are already preparing for the demand of transferring funds between crypto and tokenized euro assets. This suggests a growing interest in stablecoins. However, there is still skepticism among citizens about the EU’s plans to launch a central bank digital currency (CBDC). BeInCrypto reached out to the European Parliament for comment, but has not received a response at the time of publication.
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