Strengthening Anti-Money Laundering: New Laws by European Parliament

The European Parliament has ushered in a comprehensive set of legislative measures aimed at bolstering the European Union’s capacity to combat money laundering and terrorist financing.

These new laws ensure that individuals with a genuine interest, such as journalists, media practitioners, civil society groups, regulatory authorities, and oversight bodies, will have immediate, unfiltered, and free access to beneficial ownership information stored in national registries, interconnected across the EU. Moreover, these registries will now maintain records spanning back at least five years.

Additionally, the legislation empowers Financial Intelligence Units (FIUs) to conduct more thorough analyses and identify instances of money laundering and terrorist financing, enabling them to suspend suspicious transactions.

The legislative package introduces stringent due diligence procedures and identity verification checks for customers by obligated entities such as banks, asset and crypto managers, and real estate agents. Starting in 2029, major professional football clubs engaged in significant financial dealings with investors or sponsors will also be required to verify customer identities, monitor transactions, and report any dubious activities to FIUs.

Notably, the laws feature heightened scrutiny measures for ultra-high-net-worth individuals (with wealth exceeding EUR 50,000,000, excluding their primary residence), impose an EU-wide cash payment limit of EUR 10,000 (except for non-professional transactions between private individuals), and implement measures to ensure compliance with targeted financial sanctions and prevent circumvention.

To oversee the enforcement of these new regulations, a new authority, the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA), will be established in Frankfurt. AMLA will directly supervise high-risk financial entities, intervene in cases of supervisory lapses, serve as a central coordinating body for supervisors, and resolve disputes among them. It will also oversee the implementation of targeted financial sanctions.

The Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) package comprises the sixth Anti-Money Laundering (AML) directive, the EU “single rulebook” regulation, and the Anti-Money Laundering Authority (AMLA) regulation.

Before becoming law, these measures still require formal adoption by the Council and subsequent publication in the EU’s Official Journal.

Through the enactment of these laws, the European Parliament is heeding the calls of citizens articulated in the outcomes of the Conference on the Future of Europe, particularly addressing Proposal 16(1) and 16(2) regarding the prevention of tax evasion and cooperation on corporate taxation.

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New SECO Switzerland Guidelines

SECO in Switzerland has released a new guideline reflecting the country’s inclusion in the restrictions set by the EU regarding diamonds, cryptocurrency management, and the provision of services to Russian companies.

Full original document you can find via this link.

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Navigating MiCA, EU’s New Crypto Regulations

The impending enactment of the European Union’s Markets in Crypto Assets regulation (MiCA) in 2024 signifies a watershed moment in the global cryptocurrency landscape. As the first major jurisdiction worldwide to establish comprehensive, tailored rules specifically addressing the intricacies of the burgeoning crypto sector, the EU is poised to set a precedent that could reverberate across international markets.

MiCA’s arrival has been met with considerable anticipation and acclaim from various stakeholders. French Finance Minister Bruno Le Maire hailed it as a “landmark” development that would bring much-needed order to the perceived chaos of the “crypto Wild West.” Similarly, industry leaders like Binance CEO Changpeng “CZ” Zhao welcomed the clarity and structure provided by MiCA’s regulatory framework, emphasizing the importance of clearly defined rules for crypto exchanges.

At its core, MiCA represents a significant departure from traditional financial regulations. While drawing inspiration from existing EU rules governing securities trading, MiCA goes beyond mere adaptation, offering a nuanced approach that accommodates the unique characteristics of cryptocurrencies and related assets. Its 150-odd pages outline a comprehensive set of regulations covering various aspects of the crypto ecosystem, including custody, trading, portfolio management, and advisory services.

Central to MiCA’s regulatory architecture is the requirement for companies operating in the EU crypto market to obtain authorization from one of the bloc’s 27 national financial regulators. This mandate underscores the EU’s commitment to fostering transparency, accountability, and consumer protection within the crypto industry. Additionally, MiCA mandates the publication of transparent and informative white papers by companies offering crypto assets to the public, ensuring that potential investors are adequately informed about the associated risks.

A significant focus of MiCA is its treatment of stablecoins, which have emerged as a key component of the crypto landscape. In response to concerns about stability and governance, MiCA introduces stringent regulations governing stablecoin issuance and operation. Stablecoins, categorized as “e-money tokens” or “asset-referenced tokens” within MiCA, are required to maintain appropriate reserves and adhere to governance standards commensurate with their usage.

Moreover, MiCA introduces measures aimed at curbing the potential systemic risks posed by stablecoins, particularly those pegged to non-EU currencies. To prevent these stablecoins from undermining the stability of the euro, MiCA imposes transaction limits and other restrictions, signaling the EU’s proactive stance in safeguarding its monetary sovereignty.

While MiCA enjoys broad support within the EU crypto industry, it is not without controversy and challenges. Concerns have been raised about the complexity and stringency of the regulatory requirements, as well as potential limitations on innovation and market growth. Moreover, uncertainties persist regarding the treatment of non-fungible tokens (NFTs) and the extraterritorial enforcement of EU regulations on crypto firms operating outside the bloc.

Looking ahead, MiCA’s global impact extends beyond the borders of the EU. Its regulatory framework may serve as a blueprint for other jurisdictions grappling with the complexities of crypto regulation. The EU’s proactive approach underscores its ambition to shape the future of global finance while maintaining regulatory coherence and integrity.

In conclusion, MiCA represents a significant milestone in the ongoing evolution of the crypto sector. As the EU prepares to implement this groundbreaking regulatory framework, stakeholders worldwide will be closely monitoring its impact and implications, setting the stage for a new era of innovation, accountability, and collaboration in the digital economy.

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Digital Services Act (DSA): Impact on Online Platforms in the EU

The Digital Services Act (DSA), an amendment to the Directive of 8 June 2000 on electronic commerce (Directive 2000/31/EC), represents a comprehensive effort to modernize and harmonize national legislation within the internal market, aimed at addressing the multifaceted risks and challenges accompanying the era of digital transformation.

Enacted on 19 October 2022, the DSA pertains to a wide array of entities categorized as ‘online intermediary service providers,’ comprising hosts, social networks, search engines, travel and accommodation platforms, merchant websites, and various other digital service providers. Initially targeting online platforms and search engines with over 45 million users in the European Union, effective since 25 August 2023, the ambit of the DSA now encompasses all platforms and online intermediaries offering services within the European market, effective from February 17, 2024.

The DSA introduces a myriad of obligations for online platforms, delineating stringent requirements to ensure user protection, transparency, and accountability. Among these obligations, platforms are mandated to promptly inform users of any substantial changes to their terms and conditions, formulate terms and conditions that are easily understandable, establish comprehensive transparency reports detailing internal complaint handling systems and content moderation activities, and implement measures to safeguard user privacy, safety, and the welfare of minors. Furthermore, the DSA imposes an obligation on platforms to suspend services to users engaged in the dissemination of manifestly unlawful content, underscoring the imperative to combat illegal activities within the digital sphere.

In recognition of the diverse landscape of digital businesses, the DSA includes provisions to mitigate disproportionate constraints on smaller entities. Companies characterized by fewer than 50 employees and an annual turnover of less than EUR 10 million are afforded exemptions from certain regulatory measures, thus ensuring that regulatory burdens are commensurate with the scale and resources of businesses.

The overarching objectives of the DSA are multifaceted and ambitious, encompassing the rectification of legal gaps in electronic commerce, the facilitation of innovation and growth among small and medium-sized enterprises (SMEs) and digital service providers within the internal market, the mitigation of harmful phenomena such as the dissemination of illegal content and disinformation online, and the steadfast protection of fundamental rights guaranteed by the Charter of Fundamental Rights of the European Union. Moreover, the DSA seeks to address emerging threats to public security and democratic processes posed by certain digital content, including targeted advertising to minors and instances of cyberharassment.

In terms of enforcement mechanisms, the DSA stipulates rigorous sanctions for non-compliance, with platforms facing fines of up to 6% of their annual global turnover in the preceding year for breaches of its provisions. Additionally, in cases of recurrent and severe violations, regulatory authorities retain the authority to impose temporary restrictions on access to services as a means of ensuring compliance and safeguarding user interests within the digital landscape.

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EU Visa regime Changes: Impact Analysis

he European Commission has prepared a report on the mechanism for suspending the visa regime for citizens of certain third countries.

Particular attention is given to the section on Vanuatu and countries in the Eastern Caribbean region, where citizenship-by-investment programs, also known as “golden passports,” are actively being implemented.

There is a possibility that unpopular measures may be proposed for individual countries. It is important to note that the report does not include the results of recent assessments of these programs (for example, an assessment was conducted in Vanuatu in September).

Decision-making process: (for information) the decision to suspend visa-free regimes with third countries is made by the Council on the Commission’s recommendation.

Full text you can find via this link.

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