(1)

Regulation (EU) 2015/847 of the European Parliament and of the Council (4) has been substantially amended (5). Since further amendments are to be made, that Regulation should be recast in the interests of clarity.

(2)

Regulation (EU) 2015/847 was adopted to ensure that the Financial Action Task Force (FATF) requirements on wire transfer service providers, and in particular the obligation on payment service providers to accompany transfers of funds with information on the payer and the payee, were applied uniformly throughout the Union. The latest changes introduced in June 2019 in the FATF standards on new technologies, with the aim of regulating virtual assets and virtual asset service providers, have provided new and similar obligations for virtual asset service providers, with the purpose of facilitating the traceability of transfers of virtual assets. Further to those changes, virtual asset service providers are to accompany transfers of virtual assets with information on the originators and beneficiaries of those transfers. Virtual asset service providers are also required to obtain, hold and share that information with their counterpart on the other end of the virtual assets transfer and make it available on request to competent authorities.

(3)

Given that Regulation (EU) 2015/847 currently only applies to transfers of funds, that is to banknotes and coins, scriptural money, and electronic money as defined in Article 2, point 2, of Directive 2009/110/EC of the European Parliament and of the Council (6), it is appropriate to extend the scope of Regulation (EU) 2015/847 in order to also cover transfers of virtual assets.

(4)

Flows of illicit money through transfers of funds and virtual assets can damage the integrity, stability and reputation of the financial sector, and threaten the internal market of the Union as well as international development. Money laundering, terrorist financing and organised crime remain significant problems which should be addressed at Union level. The soundness, integrity and stability of the system of transfers of funds and virtual assets, and confidence in the financial system as a whole, could be seriously jeopardised by the efforts of criminals and their associates to disguise the origin of criminal proceeds or to transfer funds or virtual assets for criminal activities or terrorist purposes.

(5)

In order to facilitate their criminal activities, money launderers and financers of terrorism are likely to take advantage of the freedom of capital movements within the Union’s integrated financial area unless certain coordinating measures are adopted at Union level. International cooperation within the framework of FATF and the global implementation of its recommendations aim to prevent money laundering and terrorist financing while transferring funds or virtual assets.

(6)

By reason of the scale of the action to be undertaken, the Union should ensure that the International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation adopted by FATF on 16 February 2012 and then revised on 21 June 2019 (the ‘revised FATF Recommendations’), and in particular FATF Recommendation 15 on new technologies, FATF Recommendation 16 on wire transfers and the revised interpretative notes on those recommendations, are applied uniformly throughout the Union and that, in particular, there is no discrimination or discrepancy between, on the one hand, national payments or transfers of virtual assets within a Member State and, on the other, cross-border payments or transfers of virtual assets between Member States. Uncoordinated action by Member States acting alone in the field of cross-border transfers of funds and virtual assets could have a significant impact on the smooth functioning of payment systems and virtual asset services at Union level and could therefore damage the internal market in the field of financial services.

(7)

In order to foster a coherent approach in the international context and to increase the effectiveness of the fight against money laundering and terrorist financing, further Union action should take account of developments at international level, in particular the revised FATF Recommendations.

(8)

Their global reach, the speed at which transactions can be carried out and the possible anonymity offered by their transfer make virtual assets particularly susceptible to criminal misuse, including in cross-border situations. In order to effectively address the risks posed by the misuse of virtual assets for money laundering and terrorist financing purposes, the Union should promote the application at global level of the standards implemented by this Regulation and the development of the international and cross-jurisdictional dimension of the regulatory and supervisory framework for transfers of virtual assets in relation to money laundering and terrorist financing.

(9)

Directive (EU) 2015/849 of the European Parliament and of the Council (7), as a result of its amendment by Directive (EU) 2018/843 of the European Parliament and of the Council (8), introduced a definition of virtual currencies and recognised providers engaged in exchange services between virtual currencies and fiat currencies, as well as custodial wallet providers, among the entities subject to anti-money laundering and counter-terrorist financing requirements under Union law. Recent international developments, in particular within the framework of FATF, now imply the need to regulate additional categories of virtual asset service providers not yet covered and to broaden the current definition of virtual currency.

(10)

The definition of crypto-assets in Regulation (EU) 2023/1114 of the European Parliament and of the Council (9) corresponds to the definition of virtual assets set out in the revised FATF Recommendations, and the list of crypto-asset services and crypto-asset service providers covered in that Regulation also encompasses the virtual asset service providers identified as such by FATF and considered likely to raise money laundering and terrorist financing concerns. In order to ensure coherency of Union law in that area, this Regulation should use the same definitions of crypto-assets, crypto-asset services and crypto-asset service providers as those used in Regulation (EU) 2023/1114.

(11)

The implementation and enforcement of this Regulation represent relevant and effective means of preventing and combating money laundering and terrorist financing.

(12)

This Regulation is not intended to impose unnecessary burdens or costs on payment service providers, crypto-asset service providers or persons who use their services. In that regard, the preventive approach should be targeted and proportionate and should be in full compliance with the free movement of capital, which is guaranteed throughout the Union.

(13)

The Union’s Revised Strategy on Terrorist Financing of 17 July 2008 (the ‘Revised Strategy’) states that efforts must be maintained to prevent terrorist financing and to control the use by suspected terrorists of their own financial resources. It recognises that FATF is constantly seeking to improve its recommendations and is working towards a common understanding of how they should be implemented. The Revised Strategy notes that implementation of the revised FATF Recommendations by all FATF members and members of FATF-style regional bodies is assessed on a regular basis and that a common approach to implementation by Member States is therefore important.

(14)

In addition, the Commission in its communication of 7 May 2020 on an Action Plan for a comprehensive Union policy on preventing money laundering and terrorist financing identified six priority areas for urgent action to improve the Union’s anti-money laundering and counter-terrorist financing regime, including the establishment of a coherent regulatory framework for that regime in the Union to obtain more detailed and harmonised rules, in particular to address the implications of technological innovation and developments in international standards and to avoid diverging implementation of existing rules. Work at international level suggests a need to expand the scope of sectors or entities covered by that regime and to assess how it should apply to crypto-asset service providers not covered so far.

(15)

In order to prevent terrorist financing, measures with the purpose of freezing the funds and economic resources of certain persons, groups and entities have been taken, including Council Regulations (EC) No 2580/2001 (10), (EC) No 881/2002 (11) and (EU) No 356/2010 (12). To the same end, measures with the purpose of protecting the financial system against the channelling of funds and economic resources for terrorist purposes have also been taken. Directive (EU) 2015/849 contains a number of such measures. Those measures do not, however, fully prevent terrorists or other criminals from accessing payment systems for transferring their funds.

(16)

The traceability of transfers of funds and crypto-assets can be a particularly important and valuable tool in the prevention, detection and investigation of money laundering and terrorist financing, as well as in the implementation of restrictive measures, in particular those imposed by Regulations (EC) No 2580/2001, (EC) No 881/2002 and (EU) No 356/2010. It is therefore appropriate, in order to ensure the transmission of information throughout the payment chain or the transfer of crypto-assets chain, to provide for a system imposing the obligation on payment service providers to accompany transfers of funds with information on the payer and the payee and the obligation on crypto-asset service providers to accompany transfers of crypto-assets with information on the originator and the beneficiary.

(17)

Certain transfers of crypto-assets entail specific high-risk factors for money laundering, terrorist financing and other criminal activities, in particular transfers related to products, transactions or technologies designed to enhance anonymity, including privacy wallets, mixers or tumblers. To ensure the traceability of such transfers, the European Supervisory Authority (European Banking Authority), established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council (13) (EBA), should clarify, in particular, how the risk factors listed in Annex III to Directive (EU) 2015/849 are to be taken into account by crypto-asset service providers, including when carrying out transactions with non-Union entities that are not regulated, registered or licensed in any third country, or with self-hosted addresses. Where situations of higher risk are identified, EBA should issue guidelines specifying the enhanced due diligence measures that obliged entities should consider applying to mitigate such risks, including the adoption of appropriate procedures such as the use of distributed ledger technology (DLT) analytic tools, to detect the origin or destination of crypto-assets.

(18)

This Regulation should apply without prejudice to the national restrictive measures and Union restrictive measures imposed by regulations based on Article 215 of the Treaty on the Functioning of the European Union, such as Regulations (EC) No 2580/2001, (EC) No 881/2002 and (EU) No 356/2010 and Council Regulations (EU) No 267/2012 (14), (EU) 2016/1686 (15) and (EU) 2017/1509 (16), which may require that payment service providers of payers and of payees, crypto-asset service providers of originators and of beneficiaries, intermediary payment service providers, as well as intermediary crypto-asset service providers, take appropriate action to freeze certain funds and crypto-assets or that they comply with specific restrictions concerning certain transfers of funds or of crypto-assets. Payment service providers and crypto-asset service providers should have in place internal policies, procedures and controls to ensure implementation of those restrictive measures, including screening measures against Union and national lists of designated persons. EBA should issue guidelines specifying those internal policies, procedures and controls. It is intended that the requirements of this Regulation on internal policies, procedures and controls related to restrictive measures will be repealed in the near future by a Regulation of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.

(19)

The processing of personal data under this Regulation should take place in full compliance with Regulation (EU) 2016/679 of the European Parliament and of the Council (17). Further processing of personal data for commercial purposes should be strictly prohibited. The fight against money laundering and terrorist financing is recognised as an important public interest ground by all Member States. In applying this Regulation, the transfer of personal data to a third country is required to be carried out in accordance with Chapter V of Regulation (EU) 2016/679. It is important that payment service providers and crypto-asset service providers operating in multiple jurisdictions with branches or subsidiaries located outside the Union should not be prevented from transferring data about suspicious transactions within the same organisation, provided that they apply adequate safeguards. In addition, the crypto-asset service providers of the originator and of the beneficiary, the payment service providers of the payer and of the payee and the intermediary payment service providers and intermediary crypto-asset service providers should have in place appropriate technical and organisational measures to protect personal data against accidental loss, alteration, or unauthorised disclosure or access.

(20)

Persons that merely convert paper documents into electronic data and are acting under a contract with a payment service provider, and persons that provide payment service providers solely with messaging or other support systems for transmitting funds or with clearing and settlement systems should not fall within the scope of this Regulation.

(21)

Persons that provide only ancillary infrastructure, such as internet network and infrastructure service providers, cloud service providers or software developers, that enables another entity to provide transfer services for crypto-assets, should not fall within the scope of this Regulation unless they perform transfers of crypto-assets.

(22)

This Regulation should not apply to person-to-person transfers of crypto-assets conducted without the involvement of a crypto-asset service provider, or to cases where both the originator and the beneficiary are providers of transfer services for crypto-assets acting on their own behalf.

(23)

Transfers of funds corresponding to services referred to in Article 3, points (a) to (m) and point (o), of Directive (EU) 2015/2366 of the European Parliament and of the Council (18) do not fall within the scope of this Regulation. It is also appropriate to exclude from the scope of this Regulation transfers of funds and of electronic money tokens, as defined in Article 3(1), point (7), of Regulation (EU) 2023/1114, that represent a low risk of money laundering or terrorist financing. Such exclusions should cover payment cards, electronic money instruments, mobile phones or other digital or information technology (IT) prepaid or postpaid devices with similar characteristics, where they are used exclusively for the purchase of goods or services and the number of the card, instrument or device accompanies all transfers. However, the use of a payment card, an electronic money instrument, a mobile phone or any other digital or IT prepaid or postpaid device with similar characteristics in order to effect a transfer of funds or of electronic money tokens between natural persons acting as consumers for purposes other than trade, business or professional activity, falls within the scope of this Regulation. In addition, automated teller machine withdrawals, payments of taxes, fines or other levies, transfers of funds carried out through cheque images exchanges, including truncated cheques, or bills of exchange, and transfers of funds where both the payer and the payee are payment service providers acting on their own behalf should be excluded from the scope of this Regulation.

(24)

Crypto-assets that are unique and not fungible are not subject to the requirements of this Regulation unless they are classified as crypto-assets or funds under Regulation (EU) 2023/1114.

(25)

Crypto-asset automated teller machines (the ‘crypto-ATMs’) can enable users to perform transfers of crypto-assets to a crypto-asset address by depositing cash, often without any form of customer identification and verification. Crypto-ATMs are particularly exposed to money laundering and terrorist financing risks because the anonymity they provide, and the possibility of operating with cash of unknown origin, make them an ideal vehicle for illicit activities. Given the role of crypto-ATMs in providing or actively facilitating transfers of crypto-assets, transfers of crypto-assets linked to crypto-ATMs should fall under the scope of this Regulation.

(26)

In order to reflect the special characteristics of national payment systems, and provided that it is always possible to trace the transfer of funds back to the payer, Member States should be able to exempt from the scope of this Regulation certain domestic low-value transfers of funds, including electronic giro payments, used for the purchase of goods or services.

(27)

Due to the inherent borderless nature and global reach of transfers of crypto-assets and of the provision of crypto-asset services, there are no objective reasons to distinguish the treatment of money laundering and terrorist financing risks of national transfers from that of cross-border transfers. In order to reflect those specific features, no exemption from the scope of this Regulation should be granted to domestic low-value transfers of crypto-assets, in line with the FATF requirement to treat all transfers of crypto-assets as cross-border.

(28)

Payment service providers and crypto-asset service providers should ensure that the information on the payer and the payee or on the originator and the beneficiary is not missing or incomplete.

(29)

In order not to impair the efficiency of payment systems and in order to balance the risk of driving transactions underground as a result of overly strict identification requirements against the potential terrorist threat posed by small transfers of funds, the obligation to check whether information on the payer or the payee is accurate should, in the case of transfers of funds where verification has not yet taken place, be imposed only in respect of individual transfers of funds that exceed EUR 1 000, unless the transfer appears to be linked to other transfers of funds which together would exceed EUR 1 000, the funds have been received or paid out in cash or in anonymous electronic money, or where there are reasonable grounds for suspecting money laundering or terrorist financing.

(30)

Compared to transfers of funds, transfers of crypto-assets can be carried out across multiple jurisdictions at a larger scale and higher speed due to their global reach and technological characteristics. In addition to the pseudo-anonymity of crypto-assets, those features of transfers of crypto-assets offer criminals the opportunity to carry out at high speed large illicit transfers while circumventing traceability obligations and avoiding detection, by means of structuring a large transaction into smaller amounts, using multiple seemingly unrelated DLT addresses, including one-time use DLT addresses, and using automated processes. Most crypto-assets are also highly volatile and their value can fluctuate significantly within a very short timeframe which makes the calculation of linked transactions more uncertain. In order to reflect those specific features, transfers of crypto-assets should be subject to the same requirements regardless of their amount and of whether they are domestic or cross-border transfers.

(31)

For transfers of funds or for transfers of crypto-assets where verification is deemed to have taken place, payment service providers and crypto-asset service providers should not be required to verify the accuracy of the information on the payer or the payee accompanying each transfer of funds, or on the originator and the beneficiary accompanying each transfer of crypto-assets, provided that the obligations laid down in Directive (EU) 2015/849 are met.

(32)

In view of the Union legislative acts in respect of payment services, namely Regulation (EU) No 260/2012 of the European Parliament and of the Council (19), Directive (EU) 2015/2366 and Regulation (EU) 2021/1230 of the European Parliament and of the Council (20), it should be sufficient to provide that only simplified information accompany transfers of funds within the Union, such as the payment account number or a unique transaction identifier.

(33)

In order to allow the authorities responsible for combating money laundering or terrorist financing in third countries to trace the source of funds or crypto-assets used for those purposes, transfers of funds or transfers of crypto-assets from the Union to outside the Union should carry complete information on the payer and the payee, in respect of transfers of funds, and on the originator and the beneficiary, in respect of transfers of crypto-assets. Complete information on the payer and the payee should include the legal entity identifier (LEI), or any equivalent official identifier, where that identifier is provided by the payer to its payment service provider, since that would allow for better identification of the parties involved in a transfer of funds and could easily be included in existing payment message formats, such as that developed by the International Organisation for Standardisation for electronic data interchange between financial institutions. The authorities responsible for combating money laundering or terrorist financing in third countries should be granted access to complete information on the payer and the payee or on the originator and the beneficiary, as applicable, only for the purposes of preventing, detecting and investigating money laundering and terrorist financing.

(34)

Crypto-assets exist in a borderless virtual reality and can be transferred to any crypto-asset service provider, whether or not that provider is registered in a jurisdiction. Many non-Union jurisdictions have in place rules relating to data protection and its enforcement that differ from those in the Union. When transferring crypto-assets on behalf of a client to a crypto-asset service provider that is not registered in the Union, the crypto-asset service provider of the originator should assess the ability of the crypto-asset service provider of the beneficiary to receive and retain the information required under this Regulation in compliance with Regulation (EU) 2016/679, using, where appropriate, the options available in Chapter V of Regulation (EU) 2016/679. The European Data Protection Board should, after consulting EBA, issue guidelines on the practical implementation of data protection requirements for transfers of personal data to third countries in the context of transfers of crypto-assets. Situations might occur where personal data cannot be sent because the requirements of Regulation (EU) 2016/679 cannot be fulfilled. EBA should issue guidelines on suitable procedures for determining whether the transfer of crypto-assets should be executed, rejected or suspended in such cases.

(35)

The Member State authorities responsible for combating money laundering and terrorist financing, and relevant judicial and law enforcement authorities in the Member States and at Union level, should intensify cooperation with each other and with relevant third country authorities, including those in developing countries, in order to strengthen further transparency and the sharing of information and best practices.

(36)

The crypto-asset service provider of the originator should ensure that transfers of crypto-assets are accompanied by the name of the originator, the originator’s distributed ledger address, in cases where a transfer of crypto-assets is registered on a network using DLT or similar technology, the originator’s crypto-asset account number, in cases where such an account exists and is used to process the transaction, the originator’s address including the name of the country, official personal document number and customer identification number, or, alternatively, the originator’s date and place of birth, and, subject to the existence of the necessary field in the relevant message format and where provided by the originator to its crypto-asset service provider, the current LEI or, in its absence, any other available equivalent official identifier of the originator. The information should be submitted in a secure manner and in advance of, or simultaneously or concurrently with, the transfer of crypto-assets.

(37)

The crypto-asset service provider of the originator should also ensure that transfers of crypto-assets are accompanied by the name of the beneficiary, the beneficiary’s distributed ledger address, in cases where a transfer of crypto-assets is registered on a network using DLT or similar technology, the beneficiary’s account number, in cases where such an account exists and is used to process the transaction and, subject to the existence of the necessary field in the relevant message format and where provided by the originator to its crypto-asset service provider, the current LEI or, in its absence, any other available equivalent official identifier of the beneficiary. The information should be submitted in a secure manner and in advance of, or simultaneously or concurrently with, the transfer of crypto-assets.

(38)

Regarding transfers of crypto-assets, the requirements of this Regulation should apply to all transfers including transfers of crypto-assets to or from a self-hosted address, as long as there is a crypto-asset service provider involved.

(39)

In the case of a transfer to or from a self-hosted address, the crypto-asset service provider should collect the information on both the originator and the beneficiary, usually from its client. A crypto-asset service provider should in principle not be required to verify the information on the user of the self-hosted address. Nonetheless, in the case of a transfer of an amount exceeding EUR 1 000 that is sent or received on behalf of a client of a crypto-asset service provider to or from a self-hosted address, that crypto-asset service provider should verify whether that self-hosted address is effectively owned or controlled by that client.

(40)

As regards transfers of funds from a single payer to several payees that are to be sent in a batch file transfer containing individual transfers from the Union to outside the Union, provision should be made for such individual transfers to carry only the payment account number of the payer or the unique transaction identifier, as well as complete information on the payee, provided that the batch file contains complete information on the payer that is verified for accuracy and complete information on the payee that is fully traceable.

(41)

As regards batch file transfers of crypto-assets, the submission of information on the originator and beneficiary in batches should be accepted, as long as that submission occurs immediately and securely. It should not be permitted to submit the required information after the transfer, as submission must occur before or at the moment the transaction is completed, and crypto-asset service providers or other obliged entities should submit the required information simultaneously with the batch file transfer of crypto-assets.

(42)

In order to check whether the required information on the payer and the payee accompanies transfers of funds, and to help identify suspicious transactions, the payment service provider of the payee and the intermediary payment service provider should have effective procedures in place to detect whether information on the payer and the payee is missing or incomplete. Those procedures should include monitoring after or during the transfers where appropriate. Competent authorities should ensure that payment service providers include the required transaction information with the wire transfer or related message throughout the payment chain.

(43)

As regards transfers of crypto-assets, the crypto-asset service provider of the beneficiary should implement effective procedures to detect whether the information on the originator or beneficiary is missing or incomplete. Those procedures should include, where appropriate, monitoring after or during the transfers. It should not be required that the information is attached directly to the transfer of crypto-assets itself, as long as it is submitted in advance of, or simultaneously or concurrently with, the transfer of crypto-assets, and is available upon request to appropriate authorities.

(44)

Given the potential threat of money laundering and terrorist financing presented by anonymous transfers, it is appropriate to require payment service providers to request information on the payer and the payee and to require crypto-asset service providers to request information on the originator and the beneficiary. In line with the risk-based approach developed by FATF, it is appropriate to identify areas of higher and lower risk, with a view to better targeting the risk of money laundering and terrorist financing. Accordingly, the crypto-asset service provider of the beneficiary, the payment service provider of the payee, the intermediary payment service provider and the intermediary crypto-asset service provider should have effective risk-based procedures that apply where a transfer of funds lacks the required information on the payer or the payee, or where a transfer of crypto-assets lacks the required information on the originator or the beneficiary, in order to allow that service provider to decide whether to execute, reject or suspend that transfer and to determine the appropriate follow-up action to take.

(45)

Crypto-asset service providers, like all obliged entities, should assess and monitor the risk related to their clients, products and delivery channels. Crypto-asset service providers should also assess the risk related to their transactions, including where performing transfers to or from self-hosted addresses. In the event that the crypto-asset service provider is or becomes aware that the information on the originator or beneficiary using the self-hosted address is inaccurate, or where the crypto-asset service provider encounters unusual or suspicious patterns of transactions or situations of higher risks of money laundering and terrorist financing associated with transfers involving self-hosted addresses, that crypto-asset service provider should implement, where appropriate, enhanced due diligence measures to manage and mitigate the risks appropriately. The crypto-asset service provider should take those circumstances into account when assessing whether a transfer of crypto-assets, or any related transaction, is unusual and whether it is to be reported to the Financial Intelligence Unit (FIU) in accordance with Directive (EU) 2015/849.

(46)

This Regulation should be reviewed in the context of the adoption of a Regulation of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, a Directive of the European Parliament and of the Council on the mechanisms to be put in place by the Member States for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and repealing Directive (EU) 2015/849 and a Regulation of the European Parliament and of the Council establishing the Authority for Anti-Money Laundering and Countering the Financing of Terrorism and amending Regulations (EU) No 1093/2010, (EU) No 1094/2010, (EU) No 1095/2010, in order to ensure consistency with the relevant provisions.

(47)

When assessing the risks, the payment service provider of the payee, the intermediary payment service provider, the crypto-asset service provider of the beneficiary or the intermediary crypto-asset service provider should exercise special vigilance where it becomes aware that information on the payer or the payee or on the originator or the beneficiary, as applicable, is missing or incomplete, or where a transfer of crypto-assets is required to be considered suspicious based on the origin or destination of the crypto-assets concerned, and should report suspicious transactions to the competent authorities in accordance with the reporting obligations set out in Directive (EU) 2015/849.

(48)

Similar to transfers of funds between payment service providers, transfers of crypto-assets involving intermediary crypto-asset service providers might facilitate transfers as an intermediate element in a chain of transfers of crypto-assets. In line with international standards, such intermediary providers should also be subject to the requirements set out in this Regulation, in the same way as existing obligations on intermediary payment service providers.

(49)

The provisions on transfers of funds and transfers of crypto-assets in relation to which information on the payer or the payee or the originator or the beneficiary is missing or incomplete, and in relation to which transfers of crypto-assets are required to be considered suspicious based on the origin or destination of the crypto-assets concerned, apply without prejudice to any obligations on payment service providers, intermediary payment service providers, crypto-asset service providers and intermediary crypto-asset service providers to reject or suspend transfers of funds and transfers of crypto-assets which breach a provision of civil, administrative or criminal law.

(50)

In order to ensure technology neutrality, this Regulation should not mandate the use of a particular technology for the transfer of transaction information by crypto-asset service providers. To ensure the efficient implementation of requirements applicable to crypto-asset service providers under this Regulation, standard-setting initiatives involving or led by the crypto-asset industry will be critical. The resulting solutions should be interoperable through the use of international or Union-wide standards in order to allow for a swift exchange of information.

(51)

With the aim of assisting payment service providers and crypto-asset service providers to put effective procedures in place to detect cases in which they receive transfers of funds or transfers of crypto-assets with missing or incomplete information on the payer, payee, originator or beneficiary and to take effective follow-up action, EBA should issue guidelines.

(52)

To enable prompt action to be taken in the fight against money laundering and terrorist financing, payment service providers and crypto-asset service providers should respond promptly to requests for information on the payer and the payee or on the originator and the beneficiary from the authorities responsible for combating money laundering or terrorist financing in the Member State where those payment service providers are established or where those crypto-asset service providers have their registered office.

(53)

The number of working days elapsing in the Member State of the payment service provider of the payer determines the number of days to respond to requests for information on the payer.

(54)

As it may not be possible in criminal investigations to identify the data required or the individuals involved in a transaction until many months, or even years, after the original transfer of funds or transfer of crypto-assets, and in order to be able to have access to essential evidence in the context of investigations, it is appropriate to require payment service providers or crypto-asset service providers to keep records of information on the payer and the payee or the originator and the beneficiary for a period of time for the purposes of preventing, detecting and investigating money laundering and terrorist financing. That period should be limited to five years, after which all personal data should be deleted unless national law provides otherwise. If necessary for the purposes of preventing, detecting or investigating money laundering or terrorist financing, and after carrying out an assessment of the necessity and proportionality of the measure, Member States should be able to allow or require retention of records for a further period of no more than five years, without prejudice to national criminal law on evidence applicable to ongoing criminal investigations and legal proceedings and in full compliance with Directive (EU) 2016/680 of the European Parliament and of the Council (21). Those measures could be reviewed in light of the adoption of a Regulation of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.

(55)

In order to improve compliance with this Regulation, and in accordance with the Commission Communication of 9 December 2010 entitled ‘Reinforcing sanctioning regimes in the financial services sector’, the power to adopt supervisory measures and the sanctioning powers of competent authorities should be enhanced. Administrative sanctions and measures should be provided for and, given the importance of the fight against money laundering and terrorist financing, Member States should lay down sanctions and measures that are effective, proportionate and dissuasive. Member States should notify the Commission and the permanent internal committee on anti-money-laundering and countering terrorist financing referred to in Article 9a(7) of Regulation (EU) No 1093/2010 thereof.

(56)

In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (22).

(57)

A number of countries and territories which do not form part of the territory of the Union share a monetary union with a Member State, form part of the currency area of a Member State or have signed a monetary convention with the Union represented by a Member State, and have payment service providers that participate directly or indirectly in the payment and settlement systems of that Member State. In order to avoid the application of this Regulation to transfers of funds between the Member States concerned and those countries or territories having a significant negative effect on the economies of those countries or territories, it is appropriate to provide for the possibility for such transfers of funds to be treated as transfers of funds within the Member States concerned.

(58)

Given the potential high risks associated with, and the technological and regulatory complexity posed by, self-hosted addresses, including in relation to the verification of ownership information, by 1 July 2026, the Commission should assess the need for additional specific measures to mitigate the risks posed by transfers to or from self-hosted addresses or to or from entities not established in the Union, including the introduction of possible restrictions, and should assess the effectiveness and proportionality of the mechanisms used to verify the accuracy of information concerning the ownership of self-hosted addresses.

(59)

At present, Directive (EU) 2015/849 only applies to two categories of crypto-asset service providers, namely, custodial wallet providers and providers engaged in exchange services between virtual currencies and fiat currencies. In order to close existing loopholes in the anti-money laundering and counter-terrorist financing framework and to align Union law with international recommendations, Directive (EU) 2015/849 should be amended to include all categories of crypto-asset service providers as defined in Regulation (EU) 2023/1114, which covers a broader range of crypto-asset service providers. In particular, with a view to ensuring that crypto-asset service providers are subject to the same requirements and level of supervision as credit and financial institutions, it is appropriate to update the list of obliged entities by including crypto-asset service providers within the category of financial institutions for the purpose of Directive (EU) 2015/849. In addition, taking into account that traditional financial institutions also fall within the definition of crypto-asset service providers when offering such services, the identification of crypto-asset service providers as financial institutions allows for a single consistent set of rules that applies to entities providing both traditional financial services and crypto-asset services. Directive (EU) 2015/849 should also be amended in order to ensure that crypto-asset service providers are able to appropriately mitigate the money laundering and terrorist financing risks to which they are exposed.

(60)

Relationships established between crypto-asset service providers and entities established in third countries for the purpose of executing transfers of crypto-assets or the provision of similar crypto-asset services present similarities to correspondent banking relationships established with a third country’s respondent institution. As those relationships are characterised by an ongoing and repetitive nature, they should be considered a type of correspondent relationship and be subject to specific enhanced due diligence measures similar in principle to those applied in the context of banking and financial services. In particular, crypto-asset service providers should, when establishing a new correspondent relationship with a respondent entity, apply specific enhanced due diligence measures in order to identify and assess the risk exposure of that respondent, based on its reputation, the quality of supervision and its anti-money laundering and counter-terrorist financing (AML/CFT) controls. Based on the information gathered, the correspondent crypto-asset service providers should implement appropriate risk mitigating measures, which should take into account in particular the potential higher risk of money laundering and terrorist financing posed by unregistered and unlicensed entities. That is especially relevant as long as the implementation of the FATF standards relating to crypto-assets at global level remains uneven, which poses additional risks and challenges. EBA should provide guidance on how crypto-asset service providers should conduct the enhanced due diligence and should specify the appropriate risk mitigating measures, including the minimum action to be taken, when interacting with unregistered or unlicensed entities which provide crypto-asset services.

(61)

Regulation (EU) 2023/1114 has established a comprehensive regulatory framework for crypto-asset service providers which harmonises the rules pertaining to the authorisation and operation of crypto-asset service providers across the Union. In order to avoid duplication of requirements, Directive (EU) 2015/849 should be amended to remove registration requirements in relation to those categories of crypto-asset service providers which will become subject to a single licensing regime under Regulation (EU) 2023/1114.

(62)

Since the objectives of this Regulation, namely to fight money laundering and the financing of terrorism, including by implementing international standards and by ensuring the availability of basic information on payers and payees of transfer of funds, and on originators and beneficiaries of transfers of crypto-assets, cannot be sufficiently achieved by the Member States but can rather, by reason of the scale or effects of the action, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(63)

This Regulation is subject to Regulation (EU) 2016/679 and Regulation (EU) 2018/1725 of the European Parliament and of the Council (23). It respects the fundamental rights and observes the principles recognised by the Charter of Fundamental Rights of the European Union, in particular the right to respect for private and family life (Article 7), the right to the protection of personal data (Article 8), the right to an effective remedy and to a fair trial (Article 47) and the principle of ne bis in idem.

(64)

In order to ensure consistency with Regulation (EU) 2023/1114, this Regulation should apply from the date of application of that Regulation. By that date, Member States should also transpose the amendments to Directive (EU) 2015/849.

(65)

The European Data Protection Supervisor was consulted in accordance with Article 42(1) of Regulation (EU) 2018/1725 and delivered an opinion on 22 September 2021 (24),