The European Banking Authority (EBA) today issued new guidelines regarding the so-called travel rule. This regulation sets out the information, which must accompany transfers of funds and certain crypto assets, with the aim of countering the misuse of such transfers for money laundering and terrorist financing.
Objective of the Guidelines
The new guidelines clearly define what information must accompany a transfer of funds or crypto assets. In addition, they list the steps that payment service providers (PSPs), intermediary PSPs (IPSPs), crypto-asset service providers (CASPs ) and intermediary CASPs (ICASPs) must follow to detect missing or incomplete information and what to do in the case of transfers that lack the required information. The aim is to establish a consistent and effective approach for the implementation of the travel rule across the EU. This will enable competent authorities to fully trace such transfers when necessary to prevent, detect or investigate money laundering and terrorist financing.
Regulatory context
In June 2023, Regulation (EU) 2023/1113 came into force. This regulation incorporates Regulation (EU) 2015/847 and aligns the EU legal framework with the Financial Action Task Force (FATF) standards by extending the obligation to include originator and beneficiary information also to CASPs, referred to as the travel rule. It also amends Directive (EU) 2015/849 to subject CASPs, authorised under Regulation (EU) 2023/1114, to the same AML/CFT (Anti-Money Laundering/Countering the Financing of Terrorism) requirements and AML/CFT supervision as credit and financial institutions. The competent authorities have two months from the publication of the translations in the official languages of the EU to report their compliance with the guidelines. The amended guidelines will apply from 30 December 2024.
New measures and requirements
The EBA Guidelines set out the measures to be taken by PSPs and CASPs to comply with the specific articles of Regulation (EU) 2023/1113. These include:
- Identificationand verification. Measures, criteria and means for identifying and verifying the identity of the originator or beneficiary of a transfer made from or to a self-directed address.
- Compliance Steps. Procedures to be implemented by PSPs and CASPs to detect missing or incomplete information on the payer or payee.
- Handling of missing information. Procedures to be followed when transferring funds or crypto assets that lack the required information.
Additional Guidelines
In addition to the travel rule, the EBA has published guidelines on:
- Risk-based AML/CFT supervisors. For crypto asset service providers.
- ML/TF risk management. For CASPs to effectively manage their exposure to money laundering and terrorist financing risks.
The EBA is also finalising work on guidelines on internal policies, procedures and controls to comply with the restrictive measures applicable to CASPs and other financial institutions.
Legal basis
The guidelines were issued on the basis ofArticle 36 (first and second paragraph) of Regulation (EU) 2023/1113 andArticle 19a(2 ) of Directive (EU) 2015/849. These articles mandate the EBA to provide guidance to competent authorities, PSPs and CASPs on:
- Compliance measures. Measures to be taken by these suppliers to comply with the specific articles of Regulation (EU) 2023/1113.
- Technical aspects. Technical aspects of the application of this regulation to direct debts.
- Identity identification. Measures for identifying and verifying the identity of the originator or beneficiary of a transfer made to or from a self-directed address.
These 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’ (JC/GL/2017/16).
The new EBA guidelines represent a significant step towards creating a safer and more transparent financial system in the EU, strengthening the authorities’ ability to effectively combat money laundering and terrorist financing.
Credit: Source link