Sumsub Compliance Digest—March, 2024

Every month, Sumsub’s compliance team prepares a single digest with all the latest news and updates in the world of AML and beyond. We cover everything from gambling to fintech.

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Crypto 

EU 🇪🇺

ESMA publishes MICA requirements

What happened? 

The European Securities and Markets Authority (ESMA) published technical standards specifying certain requirements of the Markets in Crypto Assets Regulation (MiCA). The report includes proposals on:

• Information required for the authorisation of CASPs
• Information required where financial entities notify their intent to provide crypto-asset services
• Information required for the assessment of intended acquisition of a qualifying holding in a CASP
• How CASPs should address complaints.

Who’s affected? 

CASPs operating in the EU

Deadline: 

The European Commission shall decide whether to adopt the technical standards within 3 months. 

Read more: 

Final Report. Draft technical Standards specifying certain requirements of the Markets in Crypto Assets Regulation (MiCA) – first package

Additionally, ESMA published a third consultation package on MICA to be responded to by June 25, 2024. The consultation includes the following themes:

• Detection and reporting of suspected market abuse in crypto-assets (RTS)
• Policies and procedures, including the rights of clients, for crypto-asset transfer services (Guidelines)
• Suitability requirements for certain crypto-asset services and the format of the periodic statement for portfolio management (Guidelines)
• ICT operational resilience for certain entities under MiCA (Guidelines)

Read more: 

Consultation Paper. Draft technical standards and guidelines specifying certain requirements of the Markets in Crypto Assets Regulation (MiCA) on detection and prevention of market abuse, investor protection and operational resilience – third consultation paper 

USA 🇺🇸

Members of US Congress demand SEC clarity on Ethereum’s asset classification

What happened?

The US Financial Services Committee published a public request to the SEC, requesting clarifications on the treatment of Ethereum (ETH) and overall approach to classification of digital assets. 

Who’s affected?

 Not specified

Deadline:

Not specified

Read more:

Financial Services, Agriculture Republicans Demand SEC Clarify Position Regarding Prometheum’s Custody of Ethereum’s Ether

AML

EU 🇪🇺

The EU published a provisional agreement on AML Regulation 

What happened? 

On March 13, the EU’s Economic and Monetary Affairs andCivil Liberties, Justice and Home Affairs Committees published a provisional agreement on the Anti-Money Laundering Regulation (AMLR). 

The AMLR includes multiple amended provisions and clarifications, including those related to customer due diligence procedures to be carried out by crypto-asset service providers. 

Who’s affected? 

AML-obligated entities in the EU. 

Deadline:

Not specified

Read more: https://www.europarl.europa.eu/meetdocs/2014_2019/plmrep/COMMITTEES/CJ12/AG/2024/03-19/1297044EN.pdf

UK 🇬🇧

HM Treasury issues consultation on improving Money Laundering Act

What happened?

The UK is actively improving the effectiveness of its Money Laundering Regulations and updating the legal framework. The recently-published Consultation covers four core topics:

• Customer due diligence
• System coordination
• Scope of MLR clarification 
• Registration requirements for the Trust Registration Service.

Who’s affected? 

Market stakeholders 

Deadline: 

The closing date for responses to be submitted is June 9, 2024.

Read more: 

Improving the effectiveness of the Money Laundering Regulations

Digital ID

EU 🇪🇺

EU council adopts legal framework on European Digital Identity (eID)

What happened? 

The EU Council adopted a legal framework on European Digital Identity (eID). The adopted European Digital Identity Wallets (EDIWs) will contain a dashboard of all transactions accessible to its holder both online and offline, offer the possibility to report possible violations of data protection, and allow interaction between wallets. Moreover, citizens will be able to onboard the wallet with existing national eID schemes and benefit from free e-signatures for non-professional use. 

The main elements of the revised law can be summarized as follows:

 • “by 2026, each member state must make a digital identity wallet available to its citizens and accept EDIWs from other member states 

 • sufficient safeguards have been included to avoid discrimination against anyone choosing not to use the wallet, which will always remain voluntary

 • the wallet’s business model: issuance, use and revocation will be free of charge for all natural persons

 • the validation of electronic attestation of attributes: member states are required to provide free-of-charge validation mechanisms only to verify the authenticity and validity of the wallet and of the relying parties’ identity

 • the code for the wallets: the application software components will be open source, but member states are granted leeway so that, for justified reasons, specific components other than those installed on user devices need not be disclosed

 • consistency has been ensured between the wallet as a form of eID and the scheme under which it is issued.”

Who’s affected: 

EU residents

Deadline: 

The revised regulation will be published in the EU’s Official Journal in the coming weeks and will enter into force 20 days after its publication. The regulation will be fully implemented by 2026, when each member state must make a digital identity wallet available to its citizens and accept EDIWs from other member states according to the revised regulation.

Read more: 

European digital identity (eID): Council adopts legal framework on a secure and trustworthy digital wallet for all Europeans

Gambling 

Belgium 🇧🇪

Belgium amends its gambling regulatory regime 

What happened?

The “Law amending the Gambling Act of 7/05/1999 concerning games of chance, betting, gaming establishments, and player protection” was officially announced in the Belgian Official Gazette on March 1. This law introduces various measures, including 1) the prohibition of “3.3” devices; 2) restrictions on multiple online licenses on a single website; 3) prohibition of gifts, bonuses, and free games; 4) a general ban on advertising of games of chance; 5) an age requirement of 21+; and 6) a provision for refunds in case of inadequate age verification.

Who’s affected? 

Gambling service providers operating in Belgium 

Deadline: 

The law will enter into force on Sep 1, 2024.

Read more: 

Modification of the Gambling Act

Financial promotions 

UK 🇬🇧

FCA publishes Guidance on financial promotions on social media

What happened? 

FCA published Guidance clarifying the expectations of firms and others—such as influencers—communicating financial promotions on social media. Such promotions are expected to provide a balanced view of the benefits and risks, clearly communicating information that will help consumers make effective, well‐informed decisions. Firms should consider factors such as their target audience, what recipients need to know, the kind of decision to be made by recipients, and where confusion could arise in determining how to support consumer understanding.

Who’s affected? 

Companies promoting the financial services in the UK

Deadline:

Not specified 

Read more: 

Finalised guidance on financial promotions on social media