Anonymous Crypto Accounts Banned in EU Following New Anti-Money Laundering Laws
Specifically, it will limit how crypto can be used on such platforms as crypto casinos - one of the main industries to have benefitted from crypto’s near-anonymity, although it will also be felt by other crypto users. In fact, Alexander Reed and other experts tend to agree that the main draw of a crypto casinos is anonymous gambling, followed secondly by quick transactions. Both of these factors may no longer be deliverable by digital currency sites following the passing of this new legislation.
This brings the future of crypto exchange and casino sites into question, as know-your-customer (KYC) verification procedures will now be required on all transactions below €1,000. Increased due diligence will also now be required on transactions that exceed €1,000.
Casinos have long been targetted by those conducting illicit transactions, given that money can easily be converted into chips - or crypto - and made difficult to trace.
On Tuesday, 19th of March, three major anti-money laundering texts were voted in favor of by the EU. These new laws set new identification standards for cryptocurrency activity. Crypto-asset service providers (CASPs) now need to verify users before allowing them to conduct crypto exchanges.
To comply with the new rules, customers will now be required to submit documentation to prove their identity. CASPs will also be required to flag and report any suspicious activity.
This was voted in favor of by the EU’s Committee on Economic and Monetary Affairs and the Joint Committee on Civil Liberties, Justice, and Home Affairs. 68 votes were cast in favor, while only 10 were cast against. Now, all 27 member states will have to comply with these tougher laws.
It follows the Anti-Money Laundering Regulation (AMLR), which was agreed upon and finalized on the 18th of January, 2024. The agreement of the AMLR follows three years' worth of intense negotiations, heightened by the proliferation of cryptocurrency. Besides laundering, this new legislation was passed to prevent terrorist financing.
Crypto online casinos aren’t the only type of business affected by the passing of this new law. Other obliged entities include real estate agencies, financial institutions, traders of luxury goods, traders of luxury cars, and even professional football clubs. Basically, any industry that has historically been used for laundering activities will be impacted by this new law.
As hoped by the EU, the new rules will totally irradicate the possibility of criminals hiding illicit funds - or “dirty money” - within all member countries.
To ensure the successful implementation of these new rules, a new authoritative body will be established by the EU. This body will monitor crypto exchange sites and other platforms and ensure that verification measures are being implemented.
According to Chainalysis, a blockchain data and security company, laundering in cryptocurrency dropped in 2023. They estimated that $22.2 billion worth of crypto was sent by illicit addresses last year, which is low compared to their estimate of $31.5 billion in 2022. However, they attribute this to fewer crypto exchanges taking place overall in 2023.
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