On November 14, the European Banking Authority (EBA) released comprehensive guidelines for Payment Service Providers (PSPs) and Crypto-Asset Service Providers (CASPs) to ensure alignment with European Union (EU) and national restrictive measures. These guidelines aim to reduce risks and strengthen compliance when transferring funds or crypto assets.
“These Guidelines clarify how restrictive measures policies and procedures interact with financial institutions’ wider governance and risk management frameworks, to avoid operational and legal risks for financial institutions and ensure an effective implementation of restrictive measures,” stated the EBA.
As regulatory scrutiny intensifies for the decentralized finance (DeFi) sector, recent incidents in traditional finance reveal ongoing vulnerabilities. On November 13, Metro Bank was fined £16.7 million by the Financial Conduct Authority (FCA) due to major deficiencies in its financial crime prevention systems. A flaw in the bank’s automated monitoring system, introduced in June 2016, left over 60.5 million transactions totaling more than £51 billion unmonitored until December 2020.
This case highlights that, despite rigorous measures imposed on the DeFi sector, traditional financial institutions continue to face significant money laundering challenges. The EBA’s guidelines emphasize the need for robust internal controls across all financial sectors to prevent similar lapses.
The EBA’s guidelines, which will take effect from December 30, 2025, require PSPs and CASPs to implement reliable screening systems to ensure compliance with EU sanctions. These systems must monitor information to mitigate the risk of entities or individuals breaching restrictive measures or attempting to evade them.
The guidelines stem from the EU’s Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) reforms initiated in 2021. These reforms aim to enhance transparency and protect the financial system from illicit activities. Regulations enforcing the new standards were adopted on June 9, 2023, and will come into force on December 30, 2024.
According to a report from Grand View Research, the global anti-money laundering (AML) market was valued at USD 1.51 billion in 2023, with a projected compound annual growth rate (CAGR) of 16.0% from 2024 to 2030. A report from Chainalysis noted that crypto-related money laundering has decreased by 30% over the past year, with cryptocurrencies expected to represent just 0.47% of total money laundering activities in 2024.
