The European Parliament has confirmed its plans to consider the proposed regulation on markets in cryptoassets (MiCA) and the proposed crypto-asset-related updates to the 2015 regulation on information accompanying transfers of funds (the latter forming part of the Commission’s AML package) at its 17-20 April 2023 plenary session (a delay of 2 months).

MiCA

Provisional political agreement on the final text of MiCA was reached on 30 June 2022.  Once it has been formally approved and published in the Official Journal, we expect it to apply 18 months later (that timing remains to be confirmed).  

Information accompanying transfers of funds 

The proposed changes to the 2015 regulation on information accompanying transfers of funds forms part of the European Commission’s package of AML measures.  The intention behind the changes is to require crypto-asset service providers (CASPs) to collect, and make accessible, certain information about the originator and the beneficiary of crypto-asset transfers operated by them to ensure traceability (known as the ‘travel rule’). CASPs will also be required to put in place related internal policies, procedures and controls. Ultimately, CASPs will become obliged entities for AML/CFT purposes, in line with FATF’s recommendations.  The application date for the updated transfer of funds regulation is expected to be aligned with the application date of MiCA.

In October 2022, the European Banking Authority issued a call for input on the ESA’s 2017 Joint Guidelines to prevent the abuse of fund transfers for ML/TF purposes – any input was to be provided by 15 November 2022 and will inform the EBA’s approach to those aspects of the revised regulation on information accompanying transfers of funds that fall within its scope

AML package

On the ongoing deliverables under the AML package, the EU Council has largely confirmed its negotiating position, but Member States continue to debate where the proposed central EU supervisor (the Anti-Money Laundering Authority) should be based.  

Towards the end of 2022, initial indications from the European Parliament’s rapporteurs for the AML package were that more than 900 changes had been suggested by MEPs, so the European Parliament’s negotiating position remains to be finalised before it can begin negotiations with the EU Council. It is worth noting that a number of industry bodies publicly criticised the proposal, in the European Parliament’s preliminary report, to reduce the % threshold for assessing beneficial ownership from 25% to 5% – that proposal is unlikely to be agreed by the other EU authorities.  

Please get in touch with our market-leading Financial Regulation Group if you wish to discuss the AML package or the MiCA framework in more detail. We will publish further analysis once the regulations are finalised.