New EU Draft Targets Money Laundering Via DeFi, Metaverse, And NFT

According to CoinDesk, European lawmakers are working on a new draft for the crypto sector. This draft will tackle money laundering activities using the metaverse, DeFi, and NFTs. 

EU Lawmakers Considering Modifying Money Laundering Law

The European Parliament is considering modifying the money laundering laws the European Commission proposed in 2021. The lawmakers plan to add DeFi (Decentralized Finance) to the law in a new draft. 


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This draft will be an amendment to the existing law. However, the draft is still subject to a consensus among the parties involved.

According to the draft, DeFi platforms and the DAOs governing them should be under the purview of the EU’s counter-terrorist financing/anti-money laundering laws. The law will indirectly or directly control these entities, including by voting protocols or smart contracts, by legal and natural persons.

Additionally, operators, owners, or developers should evaluate the chances of money laundering. They should also conduct terrorist assessments before using or launching a platform or software. 

Meanwhile, officials in the money laundering department have tried to stop using privacy-providing services like Tornado Cash. They fear hackers can use it to wash money or fund terrorist activities. 

However, officials, including US OFAC (Office of Foreign Assets Control), have not identified the various entities. Recently, OFAC sanctioned Tornado Cash while Alexey Pertsev, the developer behind the protocol, awaits trial in the Netherlands. 

The Draft Sees The Metaverse As A Tool For Criminals To Move Funds 

Meanwhile, lawmakers will still have to vote on the draft of the law. Afterward, several governments will evaluate the draft at the Council of the EU. Those obligated by the EU law to carry out AML checks will also be at the meeting.

Also, it will expand the jurisdictions of entities that cover real estate agents, diamond traders, and banks to include crypto wallets and other cryptocurrency firms governed by the MiCA law.

According to the text, merchants that accept cryptocurrency payments for services and goods worth 1,000 Euros must verify and crosscheck the identity of their users. This will also apply to platforms and entire minting or trading NFTs. 

Under the new draft, such entities must report all suspicious transactions to the appropriate authorities.

The draft, dubbed Anti-Money Laundering Regulation, views the emerging sectors in the web3 industry as a threat. The proposal would supplement EU legislation governing stakeholders’ identities in cryptocurrency transactions.


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Meanwhile, the draft noted that the metaverse offers various opportunities for businesses to grow. Unfortunately, there are huge chances that bad actors could abuse the sector.

The metaverse can be a tool for fraudsters to change ill-gotten funds. These fraudsters can change these funds into virtual currencies to sell and buy virtual real estate, digital land, or other digital products.


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