The European Banking Authority (EBA) closed its public session on revising tips for cash laundering and terrorist financing (ML/TF) threat elements on August 31, 2023. The amendments purpose to increase the scope to incorporate crypto-asset service suppliers (CASPs). The EBA proposes frequent regulatory expectations for CASPs to establish and mitigate ML/TF dangers, providing sector-specific steerage. The rules additionally advise CASPs on adjusting their buyer due diligence based mostly on these dangers. The session is a part of the EBA’s ongoing efforts to strengthen the EU’s anti-money laundering and counter-financing of terrorism (AML/CFT) defenses.
ConsenSys, the event lead for the widely-used MetaMask crypto pockets and a major pressure within the blockchain sector, has formally responded to the European Banking Authority’s (EBA) current session on anti-money laundering and terrorist financing tips. The corporate’s stance was publicized by Invoice Hughes, a ConsenSys lawyer, in a tweet dated August 31, 2023. Recognized on social media as @BillHughesDC, Hughes has a multifaceted background that features roles on the Division of Justice (DOJ), the White Home (WH), and regulation agency Sullivan & Cromwell LLP (S&C). He holds levels from the College of Virginia Faculty of Regulation (UVA Regulation) and Vanderbilt College (Vandy).
Self-Hosted Wallets Not a Threat Indicator
ConsenSys emphasised that the usage of a self-hosted pockets shouldn’t be thought-about a threat issue requiring enhanced due diligence by banks. “We agree {that a} buyer’s use of a self-hosted pockets was not, by itself, indicia of threat that necessitates enhanced due diligence of that buyer by a financial institution,” Hughes acknowledged. ConsenSys urged the EBA to explicitly embrace this level in its steerage.
A number of Wallets Not Essentially Suspicious
The corporate additionally contested the notion that the usage of a number of self-hosted wallets or quite a few public addresses ought to be handled as a crimson flag for cash laundering. “Use of many wallets and addresses is completely commonplace, and to some extent is exactly how the system is designed to work,” stated Hughes. Treating such conduct as suspicious, ConsenSys argues, would invert regular anti-money laundering (AML) due diligence processes.
Transaction Limits and Threat Mitigation
ConsenSys additional commented on the difficulty of transaction limits, stating that whereas providers that don’t restrict the worth or quantity of transactions could pose a larger threat, banks shouldn’t be inspired to set terribly low limits to keep away from enhanced due diligence scrutiny.
Embracing Know-how for Compliance
Lastly, the corporate applauded the EBA for recognizing the function of recent applied sciences like blockchain analytics in threat mitigation. “We’d additional encourage the EBA and different supervisors to be open to permitting know-how, because it develops, to not simply complement commonplace due diligence mechanisms however exchange them,” Hughes added.
Implications for the Business
The response from ConsenSys comes at a time when regulatory scrutiny round cryptocurrency and blockchain know-how is intensifying globally. The EBA’s tips are anticipated to have a broad impression on how monetary establishments work together with blockchain applied sciences and cryptocurrencies.
ConsenSys’ commentary is especially noteworthy given its function within the blockchain ecosystem. The corporate is understood for its improvement of MetaMask, a preferred Ethereum-based pockets.
Conclusion
ConsenSys’ response to the EBA’s session displays broader business issues concerning the potential for overregulation to stifle innovation and impose undue burdens on customers. It additionally highlights the evolving function of know-how in compliance and threat mitigation, suggesting a future the place conventional and blockchain-based monetary programs can coexist extra harmoniously.
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