Europe bans anonymous transfer of cryptocurrency

Europe’s strict and complex money laundering legislation and strong international cooperation have not prevented money laundering from remaining a serious problem in Europe. Valdis Dombrovskis, Vice President of the European Commission and European Commissioner for Trade, announced a new European money laundering authority on Tuesday. This should ensure consistent and uniform application of European rules.

Various scandals, such as suspicious transactions conducted by Danske Bank via an Estonian branch, have exposed the weaknesses of the European system in recent years. The current rules are governed by European legislation, but oversight remains largely national. Criminal organizations exploit these differences and find loopholes to inject illicit revenue into the financial system and the economy.

According to Europol, the suspicious money flows account for about 1 per cent of the EU’s gross domestic product, or about 130 billion euros. Merid McGuinness, the European Commissioner for Financial Services, warns that “the scale of the problem should not be underestimated”.

Remarkable is the creation of AMLA, a European anti-money laundering authority, with 250 employees. The European Money Laundering Control Authority will monitor the implementation of European rules from 2024 and coordinate the work of national authorities. AMLA has direct supervision of some financial institutions that have special risks.

Also significant is the new regulation coordinating beneficial owner rules, due diligence or “due diligence” requirements. The powers of the financial intelligence services are being coordinated.

The European Commission also wants to link existing national bank account records and provide jurisdictions with access to this system. In addition, the new legislation addresses new challenges, such as cryptocurrency.

For example, transactions in cryptocurrencies, such as bitcoin, must be traceable: the name and the beneficiary must identify themselves. This tracking prevents cryptocurrencies from being used to launder criminal money or finance terrorism. Anonymous bank accounts, as well as anonymous wallets of crypto assets are prohibited.

The proposals have yet to pass into the hands of the European Parliament and member states. One difficult element in that discussion will be the European ceiling on monetary transactions. The commission sets a ceiling of €10,000. In one out of every three member states, including Germany, Austria, Luxembourg and Cyprus, there is no limit.