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AMLA to establish direct control over cryptocurrency providers

Updated: Sep 26, 2022

The EBA's head asserts that Europe's new anti-money laundering authority must have direct oversight over VASPs because to the enormous anti-money laundering concerns associated with crypto transactions.

The advice comes as the European Banking Authority's head, José Manuel Campa, wrote to EU institutions with several ideas regarding the EU's AML Action Plan.

Manuel Campa detailed the EBA's stance in the 29-page letter, which included the expansion of eligibility requirements to include crypto asset service providers (VASPs), who are presently prohibited from direct supervision by AMLA.

According to the letter, the EBA's anti-money laundering specialists endorse the Commission's main aims but would want to see the plan expanded to include the following:

  • Guarantee that institution selection criteria are enough to ensure that AMLA supervises all cross-border enterprises that represent substantial AML/CFT risks, regardless of their size.

  • Eligibility criteria should be expanded to include firms that pose significant risks but are currently excluded from direct supervision, such as crypto.

  • Adequate transparency and consistency in choosing institutions for direct supervision and in transferring supervisory authority between National Competent Authorities (NCAs) and AMLA.

Additionally, the EBA's AML specialists requested clarification on who will be responsible for risk profiling and choosing suitable institutions for direct supervision, as well as the methodology for conducting this evaluation.

“It is crucial that one harmonised risk profiling methodology is developed by the AMLA in respect of the assessment of inherent and residual risk,” said the EBA.

Additionally, the EBA cautioned that Article 13 (2) of the draft makes "no reference to the methodology that the AMLA will use to assess and evaluate the criteria set out in Articles 12 and 13 of the draft AMLAR," adding that "in the absence of such methodology, it may prove difficult for the AMLA to ensure transparency of the selection process, which may result in the selection process's outcomes being challenged by credit and financial institutions."

Under the present proposal, cross-border credit and financial institutions will be directly monitored by AMLA, with supervisory authority transferring from NCAs to AMLA.

This also means that the institution's risk exposure will be considered when determining eligibility for direct supervision by AMLA. The EBA has said the current proposal “aims to ensure that institutions with the greatest cross-border activities and which are exposed to the highest ML/TF risks will be supervised by the AMLA.”

“It also envisages that in those cases, the supervision by the AMLA will add value and strengthen the EU’s AML/CFT defences.”


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