In response to the European Parliament's approval of new Anti-Money Laundering Regulations (AMLR) on April 24, Crypto Asset Service Providers (CASP) in Europe will need to enforce rigorous Know Your Customer (KYC) procedures to combat money laundering, as outlined in a statement.

The regulations entail heightened due diligence measures and identity verification checks for customers, with obligated entities such as banks, asset and crypto asset managers, and real and virtual estate agents required to report any suspicious activities to Financial Intelligence Units (FIUs) and other competent authorities.

Additionally, the laws encompass non-financial sectors susceptible to money laundering or terrorist financing, such as gambling and sports clubs.

Under the AML, a newly established regulatory body known as the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) will oversee and ensure compliance with the updated protocols.

This development primarily impacts centralized exchanges falling under the EU’s Markets in Crypto Assets (MiCA) framework, which is pivotal legislation offering regulatory clarity to Europe's cryptocurrency sector. MiCA, enacted in June 2023, is set to be enforceable by year-end.

Patrick Hansen, the EU Strategy and Policy Director for Circle, noted the expected outcome of the votes, indicating that the AML package, including the AML Regulation, was passed by the EU Parliament plenary. The package is slated for formal adoption by the Council of the EU and will come into effect three years later.

Hansen highlighted the regulations' alignment with existing anti-money laundering laws, echoing provisions from the MiCA regulation banning privacy coins and the Transfer of Fund Regulation (TFR).

Initial proposals that posed a threat to the cryptocurrency sector, such as capping self-custody payments at €1,000 and subjecting decentralized autonomous organizations (DAOs), DeFi, and non-fungible token (NFT) platforms to AMLR obligations, were notably scaled back.