AML Requirements for Crypto Businesses in the EU: What You Need to Know in 2025
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If you're running a crypto business in the European Union, you're not just competing with other platforms-you're navigating one of the strictest financial regulatory systems in the world. The rules aren't optional. They're mandatory, complex, and changing fast. In 2025, failing to meet AML requirements doesn't just mean a fine. It means losing your license, getting shut down, or being blocked from operating across the entire EU. This isn't theoretical. Companies like Binance and others have already pulled out of certain EU markets because they couldn't keep up. So if you're trying to figure out what you actually need to do, here's the real breakdown-no fluff, no legalese.
What AML Rules Apply to Crypto Businesses in the EU Right Now?
The EU doesn't have one single law for crypto AML. It has layers. The core rules come from three major pieces of legislation: AMLD5, AMLD6, and MiCA. Together, they force crypto businesses to act like banks-even if they don't hold deposits.
AMLD5, which kicked in back in 2020, was the first real wake-up call. It said: if you exchange fiat for crypto (like EUR to BTC), or you hold crypto for customers (custodial wallets), you must register with your national financial authority. No more hiding behind "we're just a tech company." You're now a financial services provider.
AMLD6, effective in 2021, made penalties worse. Now, company directors can go to jail for AML failures. It also made it easier for EU countries to share investigation data. If a crypto firm in Spain is laundering money, German authorities can get access to their transaction logs without waiting six months.
But the biggest change came with MiCA, which became fully enforceable in 2024. If you want to offer crypto services anywhere in the EU-trading, custody, staking, issuing tokens-you need a MiCA license. It's not a national license anymore. It's an EU-wide license. Once approved, you can operate in all 27 member states. That sounds good, right? But getting it takes 9 to 12 months and costs between €350,000 and €500,000 in compliance setup alone. Over 217 firms have gotten it as of September 2025. Thousands more are still waiting.
The Travel Rule: It's Not Like the US
One of the most misunderstood rules is the Transfer of Funds Regulation-the "Travel Rule." In the US, you only need to share customer data if the transfer is over $3,000. In the EU? It's every transfer over €1,000. And it's not just about sending to another exchange. If someone sends crypto from their self-hosted wallet to your platform, you must verify the sender's identity if it's over €1,000.
Here’s what you must collect for every transaction above €1,000:
- Originator name
- Originator account number or wallet address
- Originator physical address or date of birth
- Beneficiary name
- Beneficiary account number or wallet address
- Beneficiary physical address
That’s six data points. No exceptions. No "we’ll collect it later." You need to verify this before the transaction settles. Kraken spent over €2.1 million integrating with all 28 national Financial Intelligence Units (FIUs) just to handle this. Smaller firms? They’re stuck. Some use middleware like the Traveler platform-cutting setup time from six months to eight weeks-but even that costs around €420,000.
Customer Due Diligence: It’s Tiered, Not One-Size-Fits-All
You can’t just ask everyone for a passport. The EU allows a risk-based approach. That means three levels of verification:
- Basic (under €1,000): Name and address. That’s it. No ID upload.
- Enhanced (€1,000-€10,000): Government-issued ID (passport, driver’s license), proof of address, and a live selfie for facial matching.
- Strict Enhanced (over €10,000): Everything above, plus source of funds documentation. Where did this money come from? Pay stub? Sale of property? Inheritance? You need proof. And senior management must approve each transaction.
This isn’t just paperwork. It’s operational. You need systems that auto-flag high-risk transactions and trigger alerts. The European Banking Authority found that 47 different money laundering scenarios are common in crypto-like layering funds through multiple wallets, using privacy coins, or routing money through shell companies in Malta or the Netherlands.
Who’s in Charge Now? AMLA Changed Everything
Before 2025, each EU country had its own AML supervisor. Now, there’s the Anti-Money Laundering Authority (AMLA), based in Frankfurt. It started operating in early 2025 with Bruna Szego as its first chair. AMLA doesn’t replace national regulators-it coordinates them. Think of it as a central command center.
AMLA’s job? Directly supervise the riskiest crypto firms-those handling over €1 billion in annual transactions. For everyone else, national regulators still handle day-to-day checks. But here’s the catch: AMLA can step in anytime. If it sees a pattern of suspicious activity across multiple countries, it can launch a joint investigation. In Q2 2026, AMLA will begin its first coordinated review of all licensed crypto firms, focusing on Travel Rule compliance and hidden ownership structures.
And don’t think you can game the system by registering in a "light-touch" country like Estonia or Malta. AMLA has already caught firms doing this. One Estonian-registered company moved €187 million through a Gibraltar entity to avoid stricter rules. Both authorities shut them down.
What About DeFi? The Big Blind Spot
Here’s where the EU’s rules fall short. MiCA and AMLR only apply to centralized crypto service providers-exchanges, custodians, wallet providers. They don’t cover decentralized finance (DeFi) protocols like Uniswap, Aave, or Curve. Why? Because there’s no company behind them. No CEO. No registered office. No legal entity to fine.
That’s a problem. German financial regulator BaFin documented cases in early 2025 where criminals used DeFi bridges to launder over €200 million in stolen crypto. The EU knows this. AMLA has said it’s working on guidance for DeFi, but there’s no clear plan yet. Experts like Professor Angela Walch argue this creates a dangerous loophole. "The EU is regulating the front door while the back door is wide open," she wrote in August 2025.
For now, if you run a DeFi project, you’re in a gray zone. But that could change fast. AMLA has signaled it will target privacy-enhancing technologies like mixers and ZK-proofs in Q1 2026. If you’re building a DeFi protocol with anonymity features, expect pressure soon.
What’s Coming in 2027? The EU’s Final AML Rulebook
The EU is replacing all past AML directives with a single law: the Anti-Money Laundering Regulation (AMLR). It takes effect July 1, 2027. This isn’t an update. It’s a rewrite.
Key changes include:
- A 5-working-day deadline for responding to FIU requests (right now, it varies by country)
- A €10,000 cash payment cap for business transactions
- Mandatory verification for cash payments over €3,000
- Expanding regulated entities to include football clubs, crowdfunding platforms, and high-value goods traders
This means even if you’re not a crypto exchange, if you accept crypto as payment for a €15,000 car or art piece, you’ll need AML checks. The EU is treating crypto like cash-and it’s not backing down.
Who’s Winning? Who’s Losing?
Big players are thriving. Kraken, Bitstamp, and Blockchain.com now control 67% of the EU’s regulated crypto market. Why? They had the money and teams to build compliance from day one. Institutional investors? 89% of them only work with MiCA-licensed firms. Regulatory compliance has become a competitive advantage.
But small startups? They’re getting crushed. A European Commission report from May 2025 found that 68% of crypto startups with fewer than 10 employees say compliance costs are too high. 42% have either scaled back EU operations or moved to Switzerland or Singapore. That’s a warning sign. The EU’s rules are effective-but they’re also creating a two-tier system: big firms that can afford compliance, and everyone else who can’t.
The European Central Bank says regulated CASPs have seen a 63% drop in illicit transactions since MiCA launched. That’s a win. But if the market shrinks because small innovators leave, who’s really benefiting?
How to Stay Compliant in 2025
If you’re running a crypto business in the EU, here’s your checklist:
- Get a MiCA license if you offer crypto services to EU customers.
- Implement tiered KYC: basic, enhanced, strict enhanced.
- Deploy the Travel Rule for all transactions over €1,000. Use a proven middleware solution if you can’t build it yourself.
- Hire a Money Laundering Reporting Officer (MLRO). This person must be based in the EU and have direct access to your board.
- Train your staff: 40 hours/year for compliance teams, 16 hours for everyone else. Document every session.
- Use a transaction monitoring system that flags unusual patterns-like rapid deposits and withdrawals, or transactions with blacklisted addresses.
- Don’t use privacy coins (Monero, Zcash) unless you have explicit approval from your regulator. Most EU authorities treat them as high-risk.
- Keep records for 5 years. Every transaction, every ID, every alert.
There’s no shortcut. You can’t outsource your compliance responsibility. If your third-party vendor fails, you still get fined.
What Happens If You Don’t Comply?
Penalties are severe. The EU can:
- Impose fines up to 5% of your annual turnover
- Shut down your operations in the EU
- Block your access to EU banks and payment processors
- Put your executives on a criminal watchlist
And it’s not just regulators. Customers are walking away. A 2025 survey found that 74% of EU crypto users say they only use platforms with MiCA licenses. If you’re not licensed, you’re invisible to the market.
Do I need a MiCA license if I only serve non-EU customers?
No-if you truly don’t target or offer services to EU residents, you don’t need MiCA. But if even one EU customer can access your platform, regulators may consider you in scope. The EU uses "targeting" as a test: Do you accept EUR? Do you have EU language support? Do you market in EU countries? If yes, you’re likely subject to MiCA.
Can I use a third-party KYC provider instead of building my own system?
Yes, but you’re still responsible. If your KYC provider misses a fake ID or fails to verify a high-risk user, you get fined. Many firms use providers like Onfido, Jumio, or Trulioo, but you must audit them regularly and keep logs of every verification. Don’t outsource accountability.
Are NFTs covered under EU AML rules?
Yes-if you operate as a marketplace or broker for NFTs, you’re a Crypto-Asset Service Provider under MiCA. That means you need a license, KYC, and Travel Rule compliance for NFT sales over €1,000. The EU treats NFTs as crypto-assets if they’re used for investment or payment purposes. Simple digital art with no financial function? Probably not. But anything traded like a security or currency? You’re regulated.
What’s the difference between AMLD5, AMLD6, MiCA, and AMLR?
AMLD5 brought crypto businesses under AML rules for the first time. AMLD6 added criminal penalties and cross-border cooperation. MiCA created a licensing system for crypto service providers across the EU. AMLR, coming in 2027, replaces all of them with a single, binding regulation that applies directly in every member state-no national laws needed.
Can I operate in the EU without a license if I’m based outside the bloc?
No. If you serve EU customers, you must be licensed under MiCA-even if you’re based in the US, Asia, or elsewhere. The EU has jurisdiction over anyone who targets its market. Unlicensed platforms are being blocked by EU banks and payment gateways. Your customers won’t be able to deposit euros, and your withdrawals will be frozen.
Final Thought: Compliance Is Now the Core Business
In 2025, running a crypto business in the EU isn’t about code, wallets, or trading bots. It’s about legal teams, compliance officers, audit trails, and regulatory reporting. The technology hasn’t changed-but the rules have. The winners aren’t the fastest coders. They’re the ones who built compliance into their DNA from day one. If you’re still treating AML as a box to check, you’re already behind. The EU isn’t slowing down. It’s accelerating. And the cost of ignoring it? Not just money. Your entire business.
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Murray Dejarnette
December 4, 2025 AT 08:06Reggie Herbert
December 5, 2025 AT 02:47