Syed Rahman of Rahman Ravelli details the European Banking Authority’s guidelines on tackling money laundering and terrorist financing in transfers of funds and crypto assets.
The European Banking Authority (EBA) has issued new guidance on the “travel rule’’, which relates to the information that should accompany transfers of funds and certain crypto assets.
This rule is designed to tackle the use of such transfers by those laundering money or financing terrorism. As well as specifying what information should accompany transfers, the guidelines also detail the steps that payment service providers (PSPs), intermediary PSPs (IPSPs), crypto-asset service providers (CASPs) and intermediary CASPs (ICASPs) should take to detect missing or incomplete information, and what they should do if a transfer does not have the required information.
The EBA’s action has been taken in order to ensure a consistent, effective approach to implementing the travel rule across the EU in a way that enables authorities to fully trace such transfers in order to prevent, detect or investigate money laundering and terrorist financing.
Legal Framework
In June 2023, Regulation (EU) 2023/1113 entered into force, bringing the European Union’s (EU’s) legal framework into line with the Financial Action Task Force’s (FATF’s) standards by extending the obligation to include information about the originator and beneficiary to CASPs – the so-called ‘travel rule’. It also amended Directive (EU) 2015/849 to subject CASPs to the same anti-money laundering / countering the financing of terrorism (AML/CFT) requirements and supervision as credit and financial institutions.
The EBA is finalising work on guidelines relating to internal policies, procedures and controls to comply with restrictive measures that apply to CASPs as well as other financial institutions.
Article 36 (first and second subparagraphs) of Regulation (EU) 2023/1113 and Article 19a(2) of Directive (EU) 2015/849 mandate the EBA to issue guidelines to competent authorities, PSPs and CASPs on:
- The measures those providers should take to comply with certain articles of Regulation (EU) 2023/1113.
- The technical aspects of the application of this Regulation to direct debits.
- The measures, including the criteria and means for identification and verification of the identity of the originator or beneficiary of a transfer made to or from a self-hosted address.
The new guidelines repeal with effect from 30 December 2024 the “Joint Guidelines under Article 25 of Regulation (EU) 2015/847 on the measures payment service providers should take to detect missing or incomplete information on the payer or the payee, and the procedures they should put in place to manage a transfer of funds lacking the required information’’.
