The European Union (EU) will have new AML regulations that will come into effect next year to strengthen its supervision against money laundering and terrorist financing in the crypto space.

The new AML framework includes the establishment of another regulatory authority, the Anti-Money Laundering Authority (AMLA), which will promote collaboration among key authorities and reduce risks in the EU financial system.

The EU has been working on AML/CFT regulations since 2018

In 2018, the European Union introduced some AML/CFT guidelines. However, at that time, the regulations only applied to custodial wallet providers and cryptocurrency to fiat service providers. They were also limited to anti-money laundering and terrorist financing policies and overlooked market entry controls or consumer protection requirements.

In 2021, the EU was compelled to review its AML/CFT framework following a series of high-profile crypto crimes. At that time, 1% of the region's GDP was also linked to suspicious financial activities, and all money laundering cases involved cross-border elements.

Thus, in 2023, the authority proposed a single regulation to regulate and supervise a broader range of issuance, trading, and crypto asset services and to extend regulations to other crypto asset service providers (CASP).

The framework will incorporate new anti-money laundering directives

By the end of 2025, the complete AML/CFT legislative package, including the single regulatory code for the region, is expected to be implemented. The new regulation will expand the range of companies subject to regulations, covering mortgage and consumer credit intermediaries, fund managers, crowdfunding platforms, and investment migration operators.