The European Banking Authority (EBA) has published landmark guidelines to strengthen compliance mechanisms among financial institutions, payment service providers (PSPs) and cryptoasset service providers (CASPs) in the European Union.
The guidelines, introduced on November 14, ensure that entities comply with restrictive EU measures when handling transfers of funds or cryptocurrencies. The EBA’s latest move is part of a broader effort to address gaps in governance, internal controls and risk management frameworks in the financial ecosystem.
The guidelines are set to take effect on December 30, 2025, in line with the EU’s comprehensive anti-money laundering (AML) and counter-terrorist financing (CFT) framework. The new requirements mandate the implementation of reliable control systems for PSPs and CASPs to ensure compliance with the restrictive measures.
These systems are designed to counter the risks posed by individuals or entities attempting to violate or circumvent EU sanctions. The weak nature of existing internal policies has long exposed financial institutions to operational and reputational risks, undermining the EU’s restrictive regime.
The EBA initiative aims to mitigate these risks by providing clear guidelines. It explains how restrictive measures should be integrated into financial institutions’ risk management and governance frameworks, reducing the likelihood of regulatory violations and ensuring systemic stability in the EU financial sector.
The guidelines also reflect lessons learned from previous cases of non-compliance, in which financial entities incurred significant penalties for non-compliance with sanctions regimes.
The EBA aims to create a more transparent and secure financial environment that complies with global AML and CFT standards by implementing rigorous internal controls and robust control measures.
Growing rate of cryptocurrency adoption in Europe
PSP and CASP must now adopt measures to ensure that transfers comply with restrictive measures. This includes verifying user information, checking for potential sanctions violations and identifying attempts to circumvent the regulatory framework.
The regulatory push stems from the EU’s 2021 legislative package to reform the AML and CFT framework. A key element of this reform is Regulation (EU) 2023/1113, which lays down rules on information accompanying transfers of funds and crypto-assets.
This increased regulatory scrutiny comes amid growing concerns about the potential misuse of cryptoassets for illegal activities. With the December 2025 compliance deadline looming, CSPs and PSPs must act quickly to integrate these guidelines into their operations.
Failure to do so risks serious penalties and exclusion from EU financial markets. Remarkably, Europe has recently cemented its position as a major player in the cryptocurrency market, ranking second globally with $987.25 billion in value chain from July 2023 to June 2024.
TheUK leads the region, attracting $217 billion in cryptocurrency inflows and driving innovation in stablecoin and trading services.
Stablecoins dominate the CNWE‘s cryptocurrency economy, accounting for nearly half of the region’s inflows ($422.3 billion) and growing 2.5 times faster than North America for transfers under $1 million.
The European Union’s MiCA regulation is shaping the landscape, with stablecoins already affected and broader regulation of cryptoasset providers expected in December 2024.
Earlier this year, the European Securities and Markets Authority (ESMA) also announced that it was exploring the possibility of including cryptocurrencies in the €12 trillion UCITS (Undertakings for Collective Investment in Transferable Securities) market, the most prominent investment framework in Europe.
