ESAS Report calls for Withdrawal of License if Crypto Firms Breach AML/CFT Rules

Key Takeaways:

  • The report was titled ‘Joint ESAS Report On Withdrawal Of Authorisation For Serious Breaches Of AML/CFT Rules’ 
  •  It was made jointly by European Banking Authority, European Insurance and Banking Authority, and European Securities and Banking Authority. 

A joint European Supervisory Authority(ESAS) report suggests that crypto exchanges should lose authorization if found to have breached Anti-Money Laundering(AML) laws. The 73-page report titled ‘Joint ESAS Report On Withdrawal Of Authorisation For Serious Breaches Of AML/CFT Rules’ was made jointly by European Banking Authority, European Insurance and Banking Authority, and European Securities and Banking Authority. 

The ESAS report was a study into whether the anti-money laundering powers contained in rules for different financial sectors were effective or not. “It is opportune that competent authorities granting authorization or registration to the non-bank entities indicated in this paragraph be empowered to withdraw the authorization/registration for serious breaches of AML/CFT rules,” the report reads.

The report further mentioned the upcoming Market in Crypto-Assets Regulation (MiCAR)-a sound legal framework for crypto-asset markets to develop within the EU. The report states that it “acknowledges the ongoing lawmaking process on the proposed Markets in Crypto-Assets Regulation (MiCAR).”

“It Deems opportune to highlight the need for the MiCAR to appropriately integrate AML/CFT(anti-money laundering and terrorist finance rules) issues in prudential supervision of entities to be regulated and supervised under the regime that will be envisaged in that EU Regulation” the ESAS report adds.

MiCA introduced requirements for stablecoin issuers to hold sufficient capital reserves and was made to ensure a high level of consumer and investor protection. The MiCA draft, approved by the EU Parliament, also designated European Securities and Markets Authority(ESMA) as the Crypto Regulator of the Region.

Money laundering is an issue that has long plagued the crypto sector. A report by blockchain data company Chainalysis reveals that criminals laundered $8.6 billion worth of cryptocurrency in 2021, up by 30% from 2020. Digital assets’ global reach has increased its chances of being subjected to AML/CFT risks. The anonymity factor, coupled with the lack of a central oversight body has made virtual currencies the favorite playground for money launderers. The Joint ESAS report suggests that it understands the risk factor and is willing to take steps to tackle the issue of money laundering in the digital asset sector.

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Saniya Raahath

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