EU Limits Use of Cash and Cryptocurrency to Curb Financial Fraud

The European Union (EU) has issued new measures to limit use of cash and cryptocurrencies to tackle money laundering and other financial crimes. 

Payments in cash will be restricted to a maximum of 10,000 euros under the new regulations, with member states having the option to set fewer thresholds.

Spain reportedly has a cap on cash payments of 1,000 euros. However, the European Central Bank (ECB) has already voiced resistance to such measures, labelling them “disproportionate” and highly detrimental to the acceptance of cash as legal money.

The new measures would also have an impact on the gold sector with heightened scrutiny of large cash payments and initiatives to make it more challenging to utilise cryptocurrencies and other valuables for money laundering. “Trying to stay anonymous when buying or selling crypto-assets will become much more difficult,” said Zbynek Stanjur, Minister of Finance of the Czech Republic. “Hiding behind multiple layers of ownership of companies won’t work anymore. It will even become difficult to launder dirty money via jewellers or goldsmiths.”

The EU will implement a classification system for nations based on their adherence to the Financial Action Task Force’s (FATF) recommendations. This would include FATF’s grey and black lists. 

Additionally, when processing payments of 1,000 euros or more, service providers linked to crypto assets like exchanges will need to conduct party due diligence. This implies that while purchasing or selling cryptocurrencies, the provenance of the assets should be established in the exchange.

The user’s identity must also be verified for all transactions, regardless of the amount. Virtual Asset Service Providers (VASPs) will be subject to the same anti-money laundering and anti-terrorist funding procedures as other financial firms under EU regulations.

The organisations will be forced to implement risk mitigation strategies when it comes to self-hosted wallets and other measures for cross-border bitcoin payments.

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