The European Commission announced on 20 July 2021 that it would apply the “travel rule” to companies transferring bitcoin or other crypto assets. It means that companies must collect details of senders and recipients to make crypto assets traceable. Relating to the reforms, companies must record the name, address, birth date and account number of the users, and the name of the person receiving bitcoin or another crypto asset. On the other hand, the recipient’s service provider must also check the details in case of any required information is missing. In the future, providing anonymous crypto asset wallets will be prohibited, just as the anonymous bank accounts have already been banned under the EU’s anti-money laundering (AML) regulations.
The regulation, which arises from the Financial Action Task Force which is an inter-governmental watchdog, already applies to bank wire transfers. The EU’s executive body said that the package will ensure the detection of suspicious transactions, and block the criminals to launder illicit activities or financial terrorism, and help developing the industry as it will update and harmonize legal framework of the EU’s crypto sector. Some crypto asset service providers are already covered by the anti-money laundering and terrorism funding rules but the proposing rules will be forcing all service providers to carry out due diligence on their clients.
The new regulation would create a new EU-wide anti-money laundering authority to oversee crypto assets. The Member States and the European Parliament will make the final decision, meaning that it could take two years to enter into force as a new law.