AMLA Highlights Crypto AML Gaps in MiCA Review

The European Union’s Anti-Money Laundering Authority (AMLA) has identified five key areas to review in the Markets in Crypto-Assets Regulation (MiCA). These include expanding scope to cover staking, providing a clearer legal definition of decentralized finance (DeFi), and encouraging a consistent EU-wide approach to unauthorized stablecoins.

MiCA is the EU’s first comprehensive legal framework for regulating crypto-assets and crypto-asset service providers (CASPs). Formally known as Regulation (EU) 2023/1114, MiCA establishes uniform rules across all EU member states for the issuance, trading, and custody of crypto-assets that were previously governed by fragmented national laws. 

AMLA made its recommendations in response to the European Commission’s consultation on reviewing MiCA, saying “targeted amendments or clarifications could address money laundering and terrorist financing risks more effectively and support consistent supervision across the Union.”

The authority first recommends considering dedicated requirements for crypto staking, lending, and borrowing, which MiCA does not regulate as standalone activities. It warns that existing custody provisions do not fully address risks involving pooled assets, yield generation, and temporary control transfers.

AMLA has expressed concern over reliance on self-assessment as to whether a DeFi arrangement falls outside the scope of MiCA. To address this gap, it proposes a clear legal definition of DeFi arrangements and common criteria for identifying effective control over crypto-asset services or activities. Concentrated governance tokens or the ability to pause or modify smart contracts, for example, could indicate that an arrangement is covered by MiCA despite claiming to be decentralized.

AMLA also calls for consistent treatment of unauthorized stablecoins across the European Economic Area and suggests legislative measures to remove legal uncertainty over services involving these tokens.

Another concern involves asset-referenced token (ART) issuers that are not directly covered by AML/CFT rules. AMLA recommends assessing whether customer due diligence and transaction monitoring apply throughout ART issuance, distribution, and redemption, and whether uncovered ART issuers should face explicit obligations.

Finally, AMLA suggests clearer information requirements under MiCA’s passporting regime so national AML authorities can distinguish providers operating through a local establishment from those serving customers across borders.

The European Commission’s consultation closed on September 30. Its findings will inform a report on the application of MiCA, which could be accompanied by a legislative proposal to amend or complement the regulation.