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    EBA issues new guidelines for PSPs and CASPs to enhance compliance with EU restrictive measures

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    The European Banking Authority (EBA) has outlined guidelines for payment service providers (PSPs) and crypto-asset service providers (CASPs) handling funds and crypto transfers to comply with the European Union’s restrictive measures rules. These guidelines aim to align restrictive measures with wider financial governance, mitigating potential operational and legal risks. The EBA warns of severe legal and reputational repercussions for neglecting to update control systems. The new rules will begin in December 2025. The EBA is providing assistance to navigate the Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) framework, in effect from December 2024.

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    The European Banking Authority (EBA), which is basically Europe’s banking watchdog, has cooked up some rules for payment service providers (PSPs) and crypto-asset service providers (CASPs). The EBA recently dished out a bunch of guidelines on how these guys should be handling fund and crypto transfers to stay on the right side of the European Union’s and national restrictive measures rules.

    According to the EBA, these guidelines are a big deal because they smooth out how restrictive measures policies and procedures can play nicely with the wider governance and risk management systems of financial institutions. This way, everyone avoids potential operational and legal risks.

    If financial institutions like PSPs and CASPs don’t tighten up their controls, policies and procedures, the EBA reckons there could be some pretty serious legal and reputation consequences. If everyone doesn’t stick to the playbook, it could even undermine the effectiveness of EU’s restrictive measures, leading to people trying to break the rules and impacting the stability of EU’s financial ecosystem.

    These new guidelines kick in from December 30, 2025.

    PSPs and CASPs need to invest in reliable screening systems to make sure they’re ticking all the boxes in terms of their ‘restrictive measures’ duties. They’re also required to screen information to manage any potential risk of entities or individuals trying to dodge the EU’s restrictive measures. PSPs and CASPs also have to keep an eye on the risk of users trying to get around the rules set by the EU regulators.

    In 2021, the European Commission issued a brand new package of laws to level up the EU’s Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) framework. This included new rules on info in transfers of funds and crypto. These rules were given the thumbs up on June 9, 2023, and will be in play come December 30, 2024.

    The EBA has been asked to help financial institutions navigate these new rules by issuing some handy guidelines. So, keep an eye out and get ready to play by these new rules if you’re a PSP or a CASP.

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