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The EU proposal to outlaw private cryptowallets & ensure traceability to tackle money laundering

The EU proposal to outlaw private cryptowallets & ensure traceability to tackle money laundering

Anti-money laundering: Council agrees its negotiating mandate on transparency of crypto-asset transfers

EU ambassadors today agreed on a mandate to negotiate with the European Parliament on a proposal to update existing rules on information accompanying transfers of funds. The update aims to extend the scope of the rules to certain crypto-assets.

– The aim of the proposal is to introduce an obligation for crypto-asset service providers to collect and
make accessible full information about the sender and beneficiary. This is what payment service providers currently do for wire transfers.

– The purpose is to ensure traceability of crypto-asset transfers, so as to be able to better identify
possible suspicious transactions and if necessary blocking them.

– The modifications introduced by the Council in its position streamline and clarify the Commission’s
proposal, in particular by introducing requirements for crypto-asset transfers between crypto-asset
service providers and un-hosted wallets.

– It has been clarified that the full set of originator information will have to travel with the crypto-asset transfer, regardless of the transaction amount.

The source of this information is from a ‘Council of the EU’ press release dated the 1st December 2021, 16:55

Today’s agreement is an important step towards closing the gaps in our
financial systems that are malevolently used by criminals to launder unlawful
gains or finance terrorist activities. Crypto-assets are more and more at risk of
being exploited for money laundering and criminal purposes, and I’m glad the
Council could make swift progress on this urgent proposal.

Essentially what this means is that there is currently a proposal to make cryptocurrency transfers outside of exchanges (that require KYC and monitors transactions for illegal activity). This would make private cryptocurrency transfers and the likes of Monero illegal. Since this is only a proposal, it will have to be submitted to the EU parliament and passed to be adopted as legislation. Saying this, it seems certain that the proposal will become EU law as it is one part of a larger anti-money laundering push that is currently ongoing.

This proposal is part of a package of legislative proposals to strengthen the EU’s anti-money laundering and countering terrorism financing (AML/CFT) rules, presented by the Commission on 20 July 2021. The package also includes a proposal to create a new EU authority to fight money laundering.

Opinion


Once the proposal becomes law, it is very unlikely it will change the trends of how crypto is being used, particularly in circles like hidden services. We use these coins because they are decentralised and cannot be outright controlled by governments. Clearly the EU understands this, making one wonder why they would commit to an impossible task? Are cryptocurrencies bleeding governments dry in the forms of criminal proceeds and money laundering or is there a larger play? Although not being mentioned in the press statement, it is clear that the EU is extremely worried about the monetary sovereignty of the Euro (in competition with cryptocurrencies). This makes their battle with not only the worst of the worst vendors but also average Joes holding their Doge, so that it goes to the moon. The EU and other governments feel threatened by the prospect that the power of monetary policy could be taken away from them and it is showing. If nothing else, the proposal shows the strength of cryptocurrencies and how they are becoming viable alternatives… Governments are clearly alarmed at their widespread adoption , forcing them to take nonsensical and unenforceable moves to slow their growth.

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