On 31 March 2022, the European Parliament Economic and Monetary Affairs (ECON) Committee and the Committee on Civil Liberties (LIBE) adopted a draft report on the European Commission proposal for a Regulation on information accompanying transfers of funds and certain crypto-assets.
Revision of the Regulation on Transfers of Funds
The proposed Regulation will amend Regulation 2015/847/EU on information accompanying transfers of funds, which lays down a regulatory framework for the information on payers and payees, accompanying transfers of funds for the purposes of preventing, detecting and investigating money laundering and terrorist financing. The proposed amendments will introduce requirements for the tracing of transfers of crypto-assets.
The legislative proposal is part of a legislative package on anti-money laundering (AML) and counter-terrorist financing (CFT) published by the European Commission on 20 July 2021. The legislative initiatives aim to put in practice the goals of the May 2020 Commission Money Laundering Action Plan. The package consists of four legislative proposals:
- The proposal on information accompanying transfers of funds discussed here;
- A proposed Regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.
- A proposed Regulation establishing a new EU AML/CFT supervisory authority;
- A sixth Directive on AML/CFT.
European Parliament amendments
The European Parliament ECON and LIBE Committees have adopted a number of amendments to the original European Commission proposal. These include, among others:
- An amendment requiring all transfers of crypto-assets to include information on the source of the asset and its beneficiary. This information will also need to be made available to competent authorities.
- It is clarified that the Regulation also applies to transfers from or to crypto-asset wallets based on software or hardware not hosted by a third party (so-called “unhosted wallets”), provided that a crypto-asset service provider or other obliged entity is involved.
- The members of the ECON and LIBE Committees voted to remove the exclusion of minimum thresholds and exemptions for low-value transfers of crypto-assets under the proposed Regulation, thereby enhancing its scope.
- Lastly, the report includes an amendment giving powers to the European Banking Authority to set up a public register of businesses and services involved in crypto-assets that may have a high risk of money-laundering, terrorist financing and other criminal activities. This would include a non-exhaustive list of non-compliant providers.
The text of the adopted amendments will be published in the coming days.
The adopted draft report will now go to the European Parliament plenary for endorsement, which will likely happen in April 2022. Following plenary adoption, the European Parliament will enter into so-called trilogue negotiations with the Council and the European Commission to reach a common compromise on the proposed Regulation. The Council reached its position on the proposed Regulation on 01 December 2021. Following a trilogue compromise and formal adoption by the co-legislators, the Regulation will be translated in all 24 official languages of the EU after which it will be published in the Official Journal of the EU. The Regulation will become applicable on the same day as the proposed Regulation on Markets in Crypto-Assets.