The European Parliament has passed new legislation aimed at enhancing anti-money laundering measures within the cryptocurrency industry. The regulations impose formal due diligence obligations on crypto-asset service providers (CASPs), including centralized crypto exchanges operating under the Markets in Crypto-Assets (MiCA) regulation.

Approved on April 24, the laws focus on strengthening due diligence procedures and identity verification checks for customers, extending these requirements to entities such as crypto asset managers. Additionally, CASPs will be mandated to report any suspicious activities to authorities.

MiCA, introduced by the European Union to regulate digital assets and their markets, will be fully enforceable by the end of the year.

Under the new regulations, oversight and supervision of compliance will be handled by a newly established agency called the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA), headquartered in Frankfurt, Germany. While the legislation has yet to be formally adopted by the Council and published in the EU Official Journal, it marks a significant step forward in strengthening anti-money laundering efforts within the cryptocurrency sector.

Patrick Hansen, EU strategy and policy director at Circle, expressed optimism regarding the legislation's impact. He highlighted that CASPs will be required to adhere to standard Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures, which are already mandated for crypto exchanges and custodial wallet providers in the EU under existing legislation.

Hansen described the final version of the regulations as a positive outcome for the crypto sector, noting that earlier proposals suggested stricter measures but were ultimately revised to incorporate a risk-based approach with multiple options.

In a separate development, last month, a majority of the European Parliament's lead committees decided to remove the 1,000-euro ($1,080) limit on cryptocurrency payments from self-hosted crypto wallets as part of new AML laws.