The European Parliament approved new regulations that establish formal due diligence obligations for cryptocurrency companies with the goal of combating money laundering.

The new laws are aimed at improving “due diligence measures and identity checks” for customers, extending to entities such as crypto asset managers. These entities will also be required to report any suspicious activities to authorities.

This new legislation, approved on April 24, will impact crypto-asset service providers (CASPs), like centralized crypto exchanges under the Markets in Crypto-Assets (MiCA) regulation and various other entities, including gambling services.

MiCA is a regulatory framework introduced by the European Union to oversee digital assets and their markets. It was enacted in June 2023 and will be fully enforceable by the end of the year.

A new agency, the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA), has been designated to oversee and supervise the implementation of the new rule.

AMLA’s office will be situated in Frankfurt, Germany. However, the law has not been formally adopted by the Council and has yet to be published in the EU Office Journal.

Patrick Hansen, EU strategy and policy director at Circle, expressed anticipation for the vote’s outcome in a post on X. He mentioned that the package would proceed to be officially adopted by the Council of the EU and come into effect three years later.

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In another post, Hansen mentioned that these CASPs will be required to adhere to standard Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures such as customer due diligence .

He noted that this requirement is not novel, as all crypto exchanges and custodial wallet providers in the EU are already obligated to comply with these regulations under existing legislation.

Hansen described the final version as a “positive result” for the crypto sector. He noted that earlier iterations of the proposed AMLR suggested a much stricter approach, which would have necessitated KYC on the self-custody originator/beneficiary.

However, he credited industry efforts for advocating a risk-based approach with multiple options, ultimately leading to consensus.

Last month, a majority of the European Parliament’s lead committees scrapped the 1,000-euro ($1,080) limit on cryptocurrency payments from self-hosted crypto wallets as part of new AML laws.

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