AML Risks in Privacy Coins and Self-Hosted Wallets Raised by EU Banking Regulator


The European Banking Authority plans to expand its anti-money-laundering regulations to include cryptocurrency exchanges and related businesses.

European Banking Authority preliminary guideline issued on Wednesday warns crypto businesses to be on the lookout for consumers utilising privacy coins or self-hosted wallets in an effort to detect any money laundering activities.

Following a string of crackdowns on crypto technologies that improve internet anonymity but which politicians fear might be used to conceal illegal or terrorist money, the government has opened the measures to public discussion until August 31.

The EBA warned that new technology allowing fast transfers across the globe poses increased money laundering risks for providers of crypto asset services like exchanges and wallets, known as CASPs.

Customers that use several accounts or who send money to unregulated CASPs or wallets housed in so-called “under-regulated” foreign countries also represent a security risk.

The guidelines state that financial institutions seeking crypto customers should verify their regulatory licence and ownership.

The European Union has been working to address the threat of money laundering posed by anonymous cryptocurrency transactions in recent months and years. Anonymizing cryptocurrencies like Zcash, Monero, and Dash may be outlawed entirely under proposed new anti-money-laundering regulations. The EBA warned of additional dangers facing companies that use distributed ledger technology with a cryptographic flavour in a proposal released in March.

Tornado Cash, a privacy tool built on Ethereum’s blockchain, has been blacklisted by the United States in response to allegations that it was used to secretly fundraise for the North Korean dictatorship. Like the “Choke Point” crackdown on gun firms, several politicians and former regulators have speculated that the current measures of U.S. officials amount to an attempt to cut off cryptocurrency from the regular financial system.

Also Read: Ripple advocate and attorney John Deaton predict that the crypto’s FOMO will increase as the price exceeds $2

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