EBA Updates Travel Rule Guidelines to Include Crypto Service Providers
New Travel Rule Guidelines for Crypto Exchanges
The European Banking Authority (EBA) has revised its Travel Rule guidelines to incorporate crypto service providers and intermediaries. This update, announced on July 4, mandates compliance from crypto exchanges in the European Union by December 30, 2024. Under these guidelines (EU-2023/1113), exchanges must report detailed information on funds and crypto asset transfers. Additionally, the guidelines specify the necessary data for transfers and the protocol for identifying and addressing missing information.
Efforts to Combat Money Laundering and Terrorist Financing
This regulatory update is part of the EU’s strategy to combat money laundering and terrorist financing. The EBA aims to enhance the traceability of asset transfers to support investigations. Payment Service Providers (PSPs), intermediary PSPs, Crypto-Asset Service Providers (CASPs), and intermediary CASPs will have a two-month compliance period once the guidelines are enforced.
EBA’s Statement on Compliance
According to the EBA, “The deadline for competent authorities to report whether they comply with the Guidelines will be two months after the publication of the translations into the official EU languages.” The guidelines also require the collection of user information to determine if transactions are service-related or linked to other transfers. Furthermore, crypto service providers must publicly announce their cross-border transfer policies.
Long-Term Benefits and MiCA Regulation Support
The EBA asserts that these guidelines offer significant long-term benefits by supporting the EU’s Markets in Crypto-Assets (MiCA) regulation. The aim is to create unified regional regulations to curb money laundering and counter-terrorist financing within the EU. The regulator stated, “Its main objective is to make the abuse of funds and certain crypto-asset transfers for terrorist financing and other financial crime purposes more difficult, and to enable relevant authorities to fully trace such transfers where this is necessary to prevent, detect, or investigate money laundering and terrorism financing (ML/TF).”
Implementation Timeline and MiCA Regulation Phases
The Travel Rule guideline update coincides with the second phase of the MiCA regulation, which targets crypto asset service providers and is set to commence by the end of the year. The first phase, focusing on stablecoins, is already in effect.
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