Crypto trading has recently emerged in the digital currency world and is now well-known across financial markets. Where it is increasingly becoming mainstream, it is simultaneously rising financial risks. This is why policymakers, as well as media coverage firms, are paying more attention to this industry. Considering the gaps in Anti Money Laundering (AML) measures, criminals are using it for laundering money, bribery, and funding terrorist maneuvers. 

Keeping these threats in view, global AML monitoring regulatory bodies are imposing strict regulations to support the industry as per legal frameworks. For instance, authorities impose regulations like BSA, 6AMLD, PSA, and others. The countries facilitating crypto trading need to administer the operations of exchanges and ensure that they satisfy AML compliance. The blog provides an explanatory overview of global regulations.  

AML Verification – Detailed Insights into the Global Crypto Regimes

Cryptocurrencies are digital assets making their way to the market while gaining popularity. Investors, corporate buyers, and individual customers, all are putting their money in crypto tokens to reap financial growth. However, it is mostly decentralized which leaves room for criminals to invest their black money in this industry. 

This is why regulatory authorities are imposing strict anti-money laundering regulations on both decentralized and centralized exchanges. These standards diverge in many ways and AML verification is currently the biggest challenge global firms are facing. Due to these rising threats and concerns, global authorities are putting forth the following regulations:

Crypto-Based Regulations in Europe

Crypto exchange platforms operating within and across the European Union (EU) member states fall under the jurisdiction of the Fifth Anti Money Laundering Directive (5AMLD). This standard has brought crypto wallets, crypto-to-fiat, and crypto-to-crypto platforms into scope.  Furthermore, the EU is close to enforcing new AML/CFT requirements to further specify the implications for crypto tokens and exchanges. 

Similarly, United Kingdom’s (UK) anti-money laundering authorities are also seen in actions to make the country a safe haven for crypto trading. After the majority of the countries shut down the crypto market due to inadequate AML screening, the UK became the hub for its trading. It also made certain strategies such as making stablecoins as a payment type. Moving on, the FCA – UK’s regulator, issued “Dear CEO” letters for the owners of digital asset platforms. It also put forth a joint AML compliance statement to outline sanctions and regulations for the crypto industry. 

Crypto-Based Regulations in America

Digital assets are also making headlines in the USA. For this, the regulation currently operational in the United States is the Anti Money Laundering Act 2020 (AMLA). This act brought digital assets and crypto trading into the purview of the oldest AML monitoring regulation – the Bank Secrecy Act (BSA). Since then, the regulatory authorities in the USA are enforcing more tough requirements. Furthermore, the current President “Joe Biden” approved the Development of Digital Assets (EO).

Moving on, authorities in Canada are also enforcing regulations on cryptocurrency providers to address related risks. To ensure AML compliance, the dealers and exchanges offering crypto coins should register as Money Service Businesses (MSBs). Furthermore, crypto-specific AML verification regulations are a part of existing Proceeds of Crime and Terrorist Financing Regulations (PCMLTFRs).

Crypto-Based Regulations in the Asia Pacific

Similar to other countries, Australia is also treating virtual currencies as financial products that require regulations. As per anti money laundering guidelines, in Australia, either the Australian Securities and Investment Commission (ASIC) regulate crypto assets as financial currencies or the Australian Competition and Consumer Commission (ACCC) supervises them as consumer products. Moreover, the AUSTRAC mandates crypto exchanges and other platforms to register themselves. This helps regulatory authorities to better perform AML verification. 

Within the Asia Pacific, Japan is one of the first in line to put into force cryptocurrency-specific anti money laundering regulations. Its regulatory authorities put forth distinct standards for every token and type of exchange. The regulatory guidelines are enshrined in Japan’s Payment Services Act (PSA). Furthermore, the country is soon going to regulate every crypto exchange to combat financial threats such as money laundering. This will also help in managing risk and sanctions pertaining to Russia. 

In Summation

In the end, cryptocurrency is rapidly growing with a total value of all tokens over 902 billion. Despite the growth, they also need to ensure AML compliance. Otherwise, the consequences will be denied license, closure, or relocation. Furthermore, crypto trading platforms should also perform efficient AML screening of customers periodically even if they have undergone due diligence. This way, exchanges can provide secure crypto trading while adhering to the AML regulations. The digital AML system is capable of providing crypto industries with the solutions to perform enhanced verification of customers, track their transactions, and ultimately prevent money laundering.

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Elaine Bennett
Elaine Bennett is an Australian-based digital marketing specialist focused on helping startups and small businesses grow. She writes hands-on articles about business and marketing, as it allows her to reach even more people and help them on their business journey.

Posted by Elaine Bennett

Elaine Bennett is an Australian-based digital marketing specialist focused on helping startups and small businesses grow. She writes hands-on articles about business and marketing, as it allows her to reach even more people and help them on their business journey.