European Banking Authority Seeks Feedback on Travel Rule Implementation
The European Banking Authority (EBA) is inviting feedback on the procedures proposed to apply the travel rule to cryptocurrency transfers made through wallets hosted by crypto asset service providers (CASPs). This move is part of the EBA’s efforts to prevent money laundering and terrorist financing in the crypto industry. The consultation complements a previous process that focused on due diligence procedures for anti-money laundering measures.
EBA Identifies Significant Risks Associated with CASPs
The EBA recently published an opinion on money laundering and terrorism financing risks, which indicated that competent European authorities view risks related to CASPs as significant or very significant. These risks include factors like transaction pseudonymity, dark web interaction, cybercrime, fraud schemes, scams, money laundering, and sanctions evasion.
Details of the Guidelines
The guidelines proposed by the EBA apply the travel rule to transactions between wallets hosted by CASPs. However, transactions between unhosted wallets are exempt, as they do not involve CASP intermediation. Nevertheless, if funds from an unhosted wallet are transferred to a CASP-hosted wallet and the amount involved exceeds 1,000 euros, the travel rule must be followed.
The guidelines outline various procedures that CASPs must implement to verify user control over both addresses involved in a transaction. These procedures include using advanced analytical tools, capturing user photos or videos, transferring a specified amount to the CASP’s account, signing specific messages, and obtaining customer digital signatures. CASPs are required to use at least two procedures to collect the necessary information, and they should employ additional measures if the information cannot be obtained through the initial processes.
Share Your Feedback
The consultation period for providing feedback on the guidelines will conclude on February 26, 2024.
Hot Take: European Banking Authority Actively Addresses Crypto Risks
The European Banking Authority is taking proactive steps to combat money laundering and terrorist financing risks associated with crypto assets service providers. By seeking feedback on the implementation of the travel rule and issuing guidelines, the EBA aims to enhance transparency and security in cryptocurrency transactions. This move aligns with the growing recognition of the importance of crypto regulation and demonstrates the EBA’s commitment to addressing the unique challenges posed by the crypto industry. Overall, these efforts contribute to the establishment of a safer and more accountable crypto ecosystem.
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