EU banking regulator flags AML risks in privacy coins and self-hosted wallets

The European Banking Authority has warned crypto companies to be cautious of customers using privacy coins or self-hosted wallets for potential money laundering. The EBA has proposed amending its guidelines for money laundering and terrorist financing risk factors to set regulatory expectations for crypto asset service providers. The use of mixers and tumblers, zero-knowledge proofs, and privacy coins indicate higher risk, according to the guidance. The EBA also highlighted extra risks for businesses using crypto-style distributed ledger technology. The European Union has sought to tackle money laundering risks from secretive crypto transactions, with new money laundering rules that could even ban anonymous coins such as zcash, monero, and dash outright. U.S. authorities have also sanctioned Tornado Cash, a privacy tool on the Ethereum blockchain that they say has been used to discreetly raise funds for the North Korean regime.

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