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## The European Union’s Efforts to Regulate Crypto Firms and Combat Financial Crime

The European Union’s banking watchdog, the European Banking Authority (EBA), has recently issued guidance for crypto firms to comply with its anti-money laundering and terrorist-financing requirements. By extending the scope of its existing measures to cover crypto, the EBA aims to harmonize the approach that crypto asset service providers (CASP) across the EU should adopt to combat financial crime.

The risks associated with crypto assets and the potential for money laundering and terrorist financing have prompted the EBA to take action. According to the EBA, the risks of financial crime in the crypto space can be increased due to the speed of crypto-asset transfers and the features of some products that can hide the user’s identity. Therefore, the EBA emphasizes the importance of CASPs being aware of these risks and implementing effective measures to mitigate them.

In addition to the recent guidance, the EU finalized legislation last year on the transfer of funds via digital assets as part of its landmark Markets in Crypto Assets (MiCA) regulatory package. In response to the evolving regulatory landscape, the EBA has published guidelines on risk-based supervision of CASPs and is consulting on proposed guidelines to prevent the abuse of crypto transfers in line with recommendations from the global watchdog, the Financial Action Task Force (FATF). The EBA is also seeking input on further guidance relating to internal policies and controls that CASPs should have.

Moreover, the EBA’s efforts aren’t limited to CASPs alone. The EBA has included guidance for other credit and financial institutions that have CASPs as their customers or are exposed to crypto assets, recognizing the interdependence of the financial sector.

The implementation of the new guidelines is a priority, with competent authorities required to report compliance within two months of the guidelines being translated into the official EU languages. These guidelines will come into effect from Dec. 30, coinciding with the full implementation of MiCA.

### How AI legalese decoder Can Help

As the regulatory landscape for crypto firms in the EU continues to evolve, understanding and implementing the necessary compliance measures can be complex. AI legalese decoder can support CASPs and other financial institutions in navigating the intricacies of the new guidelines. By utilizing natural language processing and machine learning, the AI legalese decoder can assist in interpreting and translating the regulatory requirements into actionable steps, ensuring that businesses are equipped to comply with the latest regulatory standards. Furthermore, the AI legalese decoder can help in identifying and addressing potential risks associated with crypto assets, enabling CASPs to effectively mitigate the risks of financial crime.

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