The European Union’s (EU) updated anti-money laundering (AML) framework for crypto-asset businesses will be enforced starting in 2025.
The new regulations aim to combat money laundering and terrorist financing while strengthening oversight of the crypto industry. A key element of this framework is the creation of the Anti-Money Laundering Authority (AMLA), which is expected to enhance collaboration across regulatory bodies and reduce financial crime risks within the EU.
Strengthened regulations address gaps in the existing framework
The EU has been refining its approach to AML and counter-terrorism financing (CFT) since 2018. Early measures targeted custodian wallet providers and crypto-to-fiat exchanges but left significant gaps, as they needed provisions for market entry controls and consumer protections. A surge in high-profile crypto-related crimes and the revelation that 1% of the EU’s GDP was tied to suspicious financial activities pushed the bloc to overhaul its framework in 2021.
The updated regulations will extend their scope to all crypto-asset service providers (CASPs). These changes will apply to a broader range of businesses to close regulatory loopholes and strengthen protections across the region’s financial system.
New AML authority and broader oversight
The establishment of the Anti-Money Laundering Authority is a key part of the framework. AMLA will oversee crypto businesses operating across borders, ensuring compliance with the new rules and reducing financial crime risks. This centralized regulatory body will work closely with EU member states and other supervisory authorities to harmonize enforcement efforts.
In addition to AMLA’s oversight, the regulations will introduce the updated 6th Money Laundering Directive (6AMLD). This directive will require EU countries to conduct regular national risk assessments and set up regulatory mechanisms to monitor their self-regulatory organizations. Member states must also develop frameworks for joint analysis by financial intelligence units (FIUs).
Transparency and new requirements for Crypto transactions
The new framework will include stricter rules for transferring funds and assets, including wire and crypto transactions. Service providers must include specific information, such as Legal Entity Identifiers (LEIs), in transfers where available. Crypto-asset service providers must collect and store detailed information about the originators and beneficiaries of transactions. Law enforcement agencies can request this data to investigate suspicious activities.
These regulations are designed to improve transparency in the crypto sector and reduce the risk of illicit financial flows. They also aim to create a safer and more reliable environment for businesses and consumers within the EU.
The EU’s comprehensive approach reflects its commitment to addressing money laundering risks while supporting the crypto industry’s growth. By 2025, the full legislative package will provide a robust framework for global crypto oversight.