Why the latest EU Anti-Money Laundering rules targeting crypto crime make compliance key

Published at: April 26, 2021

When the European Union’s Sixth Anti-Money Laundering Directive comes fully into force on June 3, every company that provides financial services to cryptocurrency customers and businesses will have to comply with much tougher regulations about when and how they identify customers.

Strictly speaking, the 6AMLD has been in force since December 2020, but crypto service providers outside the EU have another two months to come into full compliance.

This means all e-wallet providers and digital asset exchanges — among others — that have any European customers will need to be registered with EU authorities and perform stricter Know Your Transaction, or KYT, monitoring for illegal activities involving fraud, cybercrime, and money laundering and terrorism financing.

It’s worth noting that 6AMLD is the first Anti-Money Laundering directive to specifically target cybercrimes. In addition, it requires EU member states to work together to investigate and prosecute offenses, and closes a significant number of loopholes.

From a corporate point of view, the potential consequences are both broader and harsher: Unlike the 5th Anti-Money Laundering Directive, 6AMLD holds companies and other legal entities, not just individual employees, directly liable for violations. In practice, this means that companies will no longer be able to simply blame rogue employees. And penalties are stiffer — including heavy fines and even closing down businesses altogether.

This means that it is even more important than ever for cryptocurrency service providers, banks, and financial institutions to ensure that they have compliance strategies in place and staff trained to identify potential criminal behaviors such as money laundering and the financing of both terrorism and nuclear proliferation.

Tools of the trade

Developed by the Bitfury Group, Crystal Blockchain provides three basic services to banks and financial institutions, cryptocurrency exchanges and businesses, government agencies, and virtual asset service providers: KYT monitoring software, compliance training, and expert analysis.

Crystal Blockchain’s KYT monitoring software provides compliance tools that analyze and visualize crypto transaction flows, identify entities behind transactions, and provide risk scores based on blockchain interaction that can be used with Anti-Money Laundering and Know Your Customer procedures.

More Insights from Crystal Blockchain here

Beyond the software tools, Crystal Blockchain provides customized training for compliance teams on best practices for compliance workflows, including onboarding, monitoring, case management and reporting. Additionally, it can help clients integrate the software into existing AML/KYC monitoring systems.

The company also produces regular analysis, with insight reports and interactive maps drawn from proprietary data from its explorer tools. A recent report focused on stolen crypto withdrawal and transfer patterns, with the team noting that criminals are moving stolen crypto assets more quickly and using fewer “hops” to mask the final destination. Crystal Blockchain also offers interactive maps, updated quarterly, focused on things like a comprehensive, 10-year analysis of security breaches and fraud involving crypto.

Broad coverage

With more than 150 clients, thousands of addresses checked daily, 70 countries covered and 900-plus exchanges explored, Crystal Blockchain offers broad coverage. It currently supports Bitcoin, Bitcoin Cash, Bitcoin SV, Ethereum — including ERC-20 and ERC-721 tokens — Ethereum Classic, Tether, Litecoin and XRP.

The company focuses its services on three customer types: Banks and financial institutions that need AML and Counter-Terrorist Financing compliance tools; blockchain payment services that need due diligence tools; and government agencies that need blockchain analytics tools.

Along with 5AMLD and 6AMLD regulations, Crystal Blockchain supports other regional regulatory regimes, as well as international requirements such as Financial Action Task Force rules. It promises a fast response time to regulatory changes.

Learn more about Crystal Blockchain

Disclaimer: Cointelegraph does not endorse any content or product on this page. While we aim at providing you all the important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor can this article can be considered investment advice.

Tags
Technology
Blockchain
Bitcoin
Regulation
Ethereum
Bitcoin Regulation
Cryptocurrencies
Europe
Aml
European Union
Related Posts
The evolution of crypto exchanges — What’s next for the industry
From what started as something of a “technological experiment” with Bitcoin (BTC) over a decade ago, the crypto asset industry has become a significant driver for change in global financial markets. Cryptocurrency exchanges started as a means to enable crypto enthusiasts to trade digital coins outside the traditional financial system on a decentralized and largely autonomous basis. It is likely that combined with regulatory recognition and development of digital market infrastructures, acceptance of essential Anti-Money Laundering practices, investment in security protection systems, and recognition of investor protection measures will see these businesses continue to expand and potentially merge or compete …
Technology / Oct. 31, 2020
French government pushes for one agency to regulate crypto across the EU
The government of France has proposed that the European Securities and Market Authority, or ESMA, should regulate digital currency activity across the European Union. If enacted, this would establish a single authority over the crypto sector across the trading bloc and would create uniform regulations across the union through ESMA, as suggested by the French securities regulator, Autorite des Marches Financiers, or AMF. The AMF’s proposal states: “Likewise, granting ESMA the power of direct supervision of public offers of crypto-assets in the EU (scrutiny of white papers) and of crypto-asset service providers would create obvious economies of scale for all …
Technology / July 19, 2021
Europe awaits implementation of regulatory framework for crypto assets
The global landscape of crypto-asset regulations is diverse and, even though it is getting more complex, many regulators are still choosing to wait and see how this space develops and what others will do. Right now, all eyes are on the European Union and its bespoke approach to regulating crypto assets. As part of an expansive digital finance package announced in September 2020, the European Commission, or EC, issued a regulatory proposal titled Markets in Crypto-Assets, or MiCA. The proposal is now making its way through the legislative process and is subject to intense debates. This important regulatory step has …
Technology / May 1, 2021
Germany outlines favorable tax guidelines, gains on BTC and ETH sold after a year tax-free
The Federal Ministry of Finance (BaFin) published a 24-page document on Tuesday outlining clear income tax rules for cryptocurrency and virtual assets. Tax practitioners, businesses and individual taxpayers now have clear direction on the tax requirements for acquiring, trading and selling cryptocurrencies. The key takeaway is that individuals who sell BTC or ETH more than 12 months after acquisition will not be liable for taxes on the sale if they realize a profit. Parliamentary State Secretary Katja Hessel also addressed questions around the long-term staking of cryptocurrencies: “For private individuals, the sale of purchased Bitcoin and Ether is tax-free after …
Technology / May 12, 2022
What should the crypto industry expect from regulators in 2022? Experts answer, Part 1
Yat Siu of Animoca Brands Yat is the co-founder and executive chairman of Animoca Brands, which delivers digital property rights to the world’s gamers and internet users, thereby creating a new asset class, play-to-earn economies and a more equitable digital framework contributing to the building of the open Metaverse. “Regulation will start to become more defined in 2022, although how, exactly, remains to be seen. 2021’s milestone was probably the substantial growth in public awareness of blockchain — Collins Dictionary even declared ‘NFT’ the word of the year.” These quotes have been edited and condensed. The views, thoughts and opinions …
Decentralization / Jan. 8, 2022