The European Parliament adopted a new AML law package which increases the reporting requirements of crypto asset service providers (CASPs) when sending and receiving ‘anonymous’ payments between self-hosted wallets and custodial service providers, in addition to limits on cash transactions and the establishment of a ‘central watchdog’ agency, which will develop regulatory technical standards.
According to the new law, EU CASPs must perform due diligence for all transactions that originate from wallets under 1000 EUR and take additional KYC steps for those transactions over 1000 EUR. These laws also regulate no-KYC software providers, as well as the use of private coins. CASPs are effectively prohibited from providing privacy assets. These regulations exempt self-custodial providers of software and hardware.
You can also find out more about the following: resolutionAssumes the European Parliament, which adopted it on wednesday. “[t]he anonymity associated with certain electronic money products exposes them to money laundering and terrorist financing risks,” The following are some examples of how to get started: “[t]he anonymity of crypto-assets exposes them to risks of misuse for criminal purposes.”
Although lawmakers appeared to have little difficulty in putting numbers on the total amount of money laundering that occurs across all sectors, they did seem to struggle with how to measure it. original proposal – ranging between 2-5% of global GDP – as well as to their own inefficiencies – almost 99% of criminal profits escape confiscation – those looking for numbers corroborating “the increasing use of crypto-assets (such as Bitcoin) for money-laundering purposes” Investopedia is the link left to explain what Bitcoin actually is.
Cryptography is for money laundering, everyone knows. Who can prove it?
With the new law package, EU AML/CFT frameworks are updated to align with updated recommendations issued by the Financial Action Task Force – an intergovernmental body established by the G7 in 1989 to tackle money laundering and terrorist financing.
The following is a list of FATF procedures, FATF’s recommendations are based on AML/CFT assessments conducted by FATF Regional Bodies (FSRBs), IMF and World Bank. “produce objective and accurate reports of a high standard in a timely way,” “[e]nsure that there is a level playing field, whereby mutual evaluation reports (MERs), including the executive summaries, are consistent, especially with respect to the findings, the recommendations and ratings,” The following are some examples of how to get started: “[e]nsure that there is transparency and equality of treatment, in terms of the assessment process, for all countries assessed.”
The EU FSRB has been updated. 2021 annual reportThe chair introduces the piece, which will be performed in April 2023 by MONEYVAL of the EU Commission. “It is well known that money launderers have been abusing cryptocurrencies from their inception a decade ago, initially to transfer and conceal proceeds from drug trafficking. Nowadays, their methods are becoming ever more sophisticated, and larger in scale.”
MONEYVAL’s report does not appear to provide enough data to support its assertions, instead highlighting the implementation progress of virtual assets regulations. This report emphasizes that “a 2022 typologies study will be dedicated solely to cryptocurrency money laundering trends,” The author suggests that there was no study at the date of publication.
MONEYVAL typologies report The report on money laundering risks and terrorist funding in the virtual asset world does not provide conclusive information on the importance of cryptocurrency in AML/CFT. Instead, the working group analyzes and evaluates existing AML regulations.
Typologies Report states: “at the national level, the sector risk analysis heavily relies on the answers received by the authorities from the private sector itself, with very little action taken towards the verification of the facts by the supervisor.” Further, it is noted that risk assessment “lack in depth.”
You can also find out more about the following: latest IMF report On policies for crypto-assets, similar statements are made that suggest a lack verifiable information on risks associated with cryptocurrencies. financial The abuse of the word “such impacts have not been studied specifically in relation to crypto-assets”. . new IMF report According to a report released by the World Bank this week that attempts to examine cross border flows in Bitcoin “measuring Bitcoin cross-border flows is challenging, and currently only possible with a series of non-trivial assumptions.”
IMF 2024 global financial stability report in contrast does cite specific data, but places the overall amount of cryptoassets received by ransomware hackers at approximately $1100 Million – a mere 0.061% of crypto’s $1.8 Trillion market capitalization.
The World Bank 2023 report The first generation of risk assessments for money laundering and terrorist funding was based on the lessons that were learned. “some new issues were not covered in the last NRA, such as VA [virtual asset] […]”It is important to ensure that “authorities and private entities provide more data for input” The following are some examples of how to get started: “assess more risks such as VASPs.”
World Bank 2022 publication The national assessment of money laundering risk does not mention cryptocurrencies, other than to say that they should be banned. “studied further”. The paper “Illicit Transaction Flows: Concepts, Measurement and Evidence” The World Bank Research Observer published in 2020 makes no mention at all of bitcoin, virtual assets or cryptocurrencies.
Papers published by the World Bank on crypto asset adoption do not provide much more insight into the impacts of cryptocurrencies on AML/CFT efforts either – The papers “Crypto-Asset Activity around the World“What Does Digital Money Mean for Emerging Markets and Developing Economies?Redirect readers to FATF’s existing recommendations.
The World Bank paper “Decrypting New Age International Capital Flows” Cite a single academic paper On the effect of cryptocurrency on money laundering. Claiming to have found this “approximately one-quarter of bitcoin users are involved in illegal activity.” Academics question whether the methods used to measure the impact of cryptocurrency on illicit transactions are accurate. claiming The error rate of commonly used heuristics was found to be over 92%. Methods based on the user’s behavior, in particular, are particularly effective. argued The word is “the most unreliable”Their application was not deemed sufficient to justify intense investigation.
Human Rights vs. National Security: Assessing the Proportionality
The estimated volume of illegal transactions ranges between 0.34% The apparent absence of an understanding regarding the importance of cryptocurrencies for facilitating illicit transactions is evident in their failure to account for 46% in 2019 of all Bitcoin transaction volumes and in all volume of on-chain volume.
It is not a 2024 National Risk Assessment, Swiss federal police classesifies such “tremendous lack of data” As an example, “inherent risk”. citing “insufficient figures and statistics”. The report highlights the fact that cryptocurrency data is lacking. financial Flows is a flow of information “not unique to Switzerland”.
It highlights statements by the ECB. “pointed to a lack of reliable statistics” The following are some of the most effective ways to improve your own effectiveness. financial Cryptocurrency flows. Further, it highlights the findings of IMF. “significant data gaps continue to make it difficult to assess the true extent of VA [virtual assets] use in the financial system, which also hampers risk analysis by financial authorities”. The IMF recommended that a statistical exchange be initiated on the cryptocurrency transaction. “address the lack of data” As early as 2019
This assessment, echoing MONEYVAL’s concern on the evaluation and reporting of suspicious transactions, found that national police officers and prosecutors conducted a survey to obtain quantitative information about criminal prosecutions in cryptocurrency transaction and qualitative assessments regarding the challenges of cryptocurrencies for law enforcement. work The law is enforced by the police “fragmentary” The following are some examples of how to get started: “of limited relevance”.
Cybersecurity expert warn In relation to the established fundamental rights of privacy, informational self determination, right of freedom of expression and right of freedom of knowledge, future regulatory concepts are likely to clash with such fundamental rights as those outlined in the Charter of European Union Fundamental Rights, European Convention on Human Rights, right of freedom of assembly, right of privacy, right of self-determination and right of information.
The law as governed by article The European Union’s actions under article 5 of Maastricht Treaty “shall not exceed what is necessary to achieve the objective of the Treaties.” There is a question about the MEPs’ ability to vote with knowledge on the EU AML legislation, when there are no definitive data available on cryptocurrency and its role in countering money laundering or terrorist financing.
The guest blogger for this post is L0laL33tz. The opinions expressed by the authors are their own. own These views do not reflect the opinions of BTC Inc.
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Source: bitcoinmagazine.com