EBA to Implement EU Travel Rule for Crypto Exchanges Starting December
With the aim of strengthening measures against Anti-Money Laundering (AML), the European Banking Authority (EBA) has broadened the scope of Travel Rules guidelines to encompass crypto service providers along with their intermediaries. Effective December 30, crypto exchanges operating in the EU must adhere to Regulation (EU) 2023/1113, mandating the reporting of information concerning fund and crypto asset transfers. Additionally, Crypto Asset Service Providers (CASPs) fall within the purview of the EU’s Markets in Crypto-Assets Regulation (MiCA) and will be subject to the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) framework.
Within a timeframe of two months, payment service providers (PSPs), intermediary PSPs, CASPs, and intermediary CASPs are required to confirm their compliance with the newly introduced regulations. To ensure compliance, crypto service providers must gather user data for both fund and crypto transfers, ascertain transactions linked to their services, and implement measures to identify multi-intermediation actions and cross-border transfers.
The EBA acknowledges the potential financial burden that compliance with the EU Travel Rule guidelines may place on crypto exchanges and service providers. Nonetheless, the regulatory body highlights a positive aspect by stating, “Overall, the advantages stemming from these guidelines are anticipated to outweigh potential costs, thus reinforcing the effectiveness of the fight against Money Laundering and Terrorist Financing (ML/TF).”
Even with the enforcement of the EU’s Anti-Money Laundering Directive (AMLD) or relevant domestic AML/CFT regulations, crypto exchanges and service providers are obligated to follow the corresponding AML/CFT prerequisites. As global authorities tighten regulatory frameworks concerning crypto exchanges, crypto protocols are actively engaged in developing strategies to ensure compliance.
In a significant move towards combating financial crimes such as money laundering and terrorist financing, the world’s largest crypto exchange, Binance, joined the Global Travel Rule alliance in March. The Financial Intelligence Unit (FIU) in India has intensified efforts to ensure compliance with AML and CFT standards for crypto exchanges.
