In 2023, Cryptocurrency companies and Fintechs were fined more AML-CFT fines than all other activities combined.
According to the Financial Times, cryptocurrency and digital payment companies have had to pay a staggering $5.8 billion in fines, primarily for their numerous shortcomings in anti-money laundering and counter-terrorism financing (AML-CFT), the weakness of their controls, and non-compliance with international sanctions and other anti-money laundering laws.
Unparalleled infringements for Fintech and Crypto in 2023
Companies in the cryptocurrency sector were hit with 11 separate fines in 2023, compared with an average of just two per year over the past five years. Meanwhile, digital payment companies received 27 fines, representing a sharp increase from past averages.
The exorbitant sum of €5.8 billion essentially includes the $4.3 billion fine imposed on cryptocurrency platform BINANCE...but this is not the only event that contributed to the wind of panic in the crypto community in 2023.
The decision to convict FTX's founder of money laundering and fraud created further repercussions throughout the industry. Despite this frenzy, important measures have been implemented to clean up the cryptoasset world in 2023, including the new MiCA regulation, the TFR regulation on fund transfers and the new status of PSANs in France
The upcoming regulations on cryptoassets should have a positive impact and act as a stabilizer, while fines should have a deterrent effect and remind industry players that anti-money laundering and counter-terrorist financing laws and regulations apply to them in the same way as they do to all other players subject to them.
At last, stricter regulations in Europe on past exceptions?
The European Banking Authority (EBA) has specifically extended its guidance on money laundering and terrorist financing risk factors to include cryptoasset service operators.
The European Council also announced in 2024 the creation of the new Anti-Money Laundering Authority (AM LA) - a European authority whose mission is to combat money laundering and the financing of terrorism.
Among the proposals put forward:
- Increased due diligence on the part of financial institutions with regard to large fortunes or when transactions involve large amounts;
- Increased vigilance for cross-border crypto transactions.
While entities subject to AML-CFT obligations already comply with regulatory requirements, the new rules now apply to the bulk of the crypto and fintech world. All cryptoasset service providers now have a duty of care towards customers, which covers in particular the verification of KYC data and monitoring on the various sanctions lists, for any transaction exceeding €1,000.
While KYC & AML-CFT processes are indispensable arsenals for crypto exchange platforms and fintech to protect themselves and their customers against fraud and money laundering, they also play a major role in helping companies comply with current regulations (AML-CFT,SAPIN 2, MiCA ...).
It's not always easy to comply with these complex and time-consuming regulations!
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