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EU Council adopts AML plans, restricts stablecoins until all risks are addressed

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EU Council adopts AML plans, restricts stablecoins until all risks are addressed

The European Council adopted plans aimed at strengthening the bloc's existing regulatory frameworks against money laundering and terrorism financing and called on the European Commission to assess possible further options to further enhance current regulations.

In particular, the council wants the EU executive body to explore the possibility and pros and cons of establishing a separate EU body that would have supervisory responsibilities, while noting the implementation of a fifth revision of the AML directive, a new capital requirements directive for banks or CRD5, and the review of the functioning of the European Supervisory Authorities, will all strengthen existing regulations.

The council also called on national authorities to swiftly transpose AML legislation into national law.

Meanwhile, the EU finance ministers reached an agreement on so-called stablecoins, saying no global arrangement for such should be allowed in the bloc until all the risks they could pose are properly addressed.

The council and the European Commission expressed their commitment in establishing a common EU approach to regulate crypto-assets but acknowledged the risks, including concerns related to money laundering and terrorism financing, that some present.

Some global projects involving stablecoins did not have enough information on how they will operate their business and manage risks, and this makes it "very difficult" for the EU to reach definitive conclusions on whether its existing regulatory framework applies, according a Dec. 5 joint statement by the council and the commission.

Stablecoins, such as Facebook Inc.'s Libra, are cryptocurrencies backed by a basket of different currencies and bonds. Libra, which is slated to be launched in early 2020, has faced growing scrutiny from regulators over the past few months.

Separately, the council laid out its main objectives to further strengthen the EU economy through the potential establishment of a pan-European capital markets union. Among the objectives were providing support to member states for their transition to sustainable economies and the removal of structural and legal barriers for increased cross border capital flows.