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Consultation of the European Commission on its AML/CFT Plan

Adan is answering the European Commission’s consultation on the next revision of the rules applicable to the fight against money laundering and the financing of terrorism (LCB-FT), scheduled for January 2021. The Association takes a general position on this occasion.

Adan responds to the European Commission’s consultation on the next revision of the rules applicable to the fight against money laundering and the financing of terrorism (LCB-FT), scheduled for January 2021, and issues, on this occasion, a general position on the LCB-FT system applied to digital assets which details the weaknesses of the current approach and its consequences and then proposes adjustments.

On March 25, 2020, the European Commission adopts its new relative action plan with a view to adjusting the existing regulations. The objective is to strengthen the current framework and the supervision of reporting entities in order to adapt to financial innovation and to improve its homogeneous application within the EU. In order to gather the industry’s opinion on the avenues to be explored to achieve this, the Commission launched a public consultation on May 7, in which the Adan wished to take part.

In this context, Adan has drafted a general position paper on the subject of LCB-FT applied to the digital assets sector. Entitled Towards a suitable AML/CFT regime for markets in crypto-assets, this position paper aims to :

  • explain the reasons why the application of the AML/CFT regime, in its current state, and the traditional schemes of analysis of the AML/CFT risks of the players in the digital assets sector are not adapted to this industry: the too strong amalgam between the financial industry and the crypto industry, and the erroneous negative a priori on the AML/CFT risks carried by the digital assets sector ;

  • describe the consequences of such an approach: the poor appreciation of LCB/FT risks by crypto players, the atmosphere of mistrust that this creates in their relations with banking players, and in fine the obstacles to the development of the sector and to EU competitiveness in this field.

  • propose recommendations to the EC with a view to the upcoming revision of the LCB-FT regime: adapt the rules to crypto players when they are deemed unsuitable (with already a few examples), adopt a new risk analysis and supervision prism for this industry, and assess the impact of each envisaged element of the LCB-FT scheme on the sector’s competitiveness.

Adan also responded to the issues raised by the European Commission in its consultation document, through which The Association notably promotes the adoption of a European regulation and the creation of a new European supervisory authority dedicated to LCB-FT in order to coordinate the supervisory efforts of national regulators.

The European Commission’s legislative proposal is expected in the first quarter of 2021.

Read Adan’s position paper

2020-07-29_ADAN-CE-Consultation-AMLCFT