AML Requirements for Crypto Businesses in the EU: What You Need to Know in 2026
Feb, 25 2026
The European Union has become the global leader in regulating cryptocurrency businesses, and if you're running a crypto company anywhere in the world, you need to understand what AML requirements for crypto businesses in EU actually mean in practice. This isn’t theoretical - it’s law. And it’s changing how crypto operates across the continent.
What Exactly Is Covered by EU AML Rules?
The EU doesn’t just ask crypto businesses to follow guidelines. It demands full compliance through binding laws. The core framework today is built on three pillars: the Markets in Crypto-Assets Regulation (MiCA), the Anti-Money Laundering Regulation (AMLR), and the Transfer of Funds Regulation (TFR). Together, they cover everything from how you verify customers to how you track every euro moving through your platform.
Before 2024, only two types of crypto businesses had to register: exchanges that traded fiat for crypto and custodial wallet providers. Now, under MiCA, any company offering crypto services - including trading, custody, staking, or even running a decentralized exchange interface - must get licensed. There’s no loophole. If you’re serving EU customers, you’re in scope.
The Travel Rule: It’s Not Like the US
One of the biggest surprises for U.S.-based crypto firms is how strict the EU’s Travel Rule is. In the U.S., you only need to share transaction data if the amount is $3,000 or more. In the EU, it applies to every single transaction, no matter how small. Even a €1 transfer from one wallet to another triggers the rule.
And it’s not just about names. For every transaction, you must collect and verify six data points:
- Originator’s full name
- Originator’s account number or wallet identifier
- Originator’s physical address or date of birth
- Beneficiary’s full name
- Beneficiary’s account number or wallet identifier
- Beneficiary’s physical address
This applies to transfers between regulated entities and to self-hosted wallets when the value exceeds €1,000. That means if someone sends €1,500 from your platform to a MetaMask wallet, you’re legally required to verify that wallet belongs to the recipient. No exceptions. No rounding down. This is why companies like Kraken spent over €2 million just to connect to all 28 national Financial Intelligence Units (FIUs) across the EU.
Customer Due Diligence: Tiered and Strict
AMLA (the new EU Anti-Money Laundering Authority) requires a risk-based approach - but it’s still very detailed. Here’s how it breaks down:
- Under €1,000: Basic ID - name and address. No document upload needed.
- €1,000 to €10,000: Enhanced verification - government-issued ID, proof of address, and a live selfie match.
- Over €10,000: Strict enhanced due diligence - source of funds, source of wealth, senior management approval, and ongoing monitoring.
It’s not enough to collect this data. You must store it for at least five years. You must train staff annually. You need a designated Money Laundering Reporting Officer (MLRO). And you must file Suspicious Activity Reports (SARs) if anything looks off - even if you’re not sure. The penalty for missing a SAR? Up to 5% of your annual turnover.
Who’s in Charge Now? AMLA and the Shift in Power
As of January 2025, the Anti-Money Laundering Authority (AMLA) took over supervision from national agencies. It’s the first EU-wide body with direct power to investigate, fine, and shut down crypto firms. Bruna Szego, its chair, made it clear: "We are not here to stifle innovation. We are here to stop criminals."
AMLA doesn’t replace national regulators - it coordinates them. So if a crypto firm based in Estonia tries to hide behind a shell company in Malta, AMLA can pull records from both countries and act. In 2025, they investigated 17 firms for "forum shopping" - trying to register in the laxest jurisdiction to avoid scrutiny. One Estonian firm was fined €12 million for routing €187 million through a Gibraltar entity to dodge stricter rules.
What About DeFi? The Big Blind Spot
Here’s where things get messy. The EU’s rules assume there’s a company, a CEO, a legal entity you can hold accountable. But decentralized finance (DeFi) protocols? There’s no company. No headquarters. No employees. Just code.
That’s a problem. The European Banking Authority’s October 2025 report showed that DeFi protocols were used in 38% of all crypto-related money laundering cases last year. German regulator BaFin documented cases where criminals used automated liquidity pools to launder €45 million in stolen Bitcoin - with no single entity to shut down.
Right now, the EU has no clear rules for DeFi. Some firms try to comply by requiring KYC at the front-end gateway (like a centralized bridge to a DeFi protocol). Others ignore it entirely. Experts warn this gap will be exploited. Professor Angela Walch from the University of Texas argues that forcing DeFi platforms to comply with MiCA could kill innovation - but without it, the EU’s entire AML framework has a hole.
Costs Are Real - And They’re Rising
Getting licensed under MiCA isn’t cheap. According to data from the European Securities and Markets Authority (ESMA), the average cost to set up full compliance for a mid-sized crypto firm is between €350,000 and €500,000. That includes legal fees, software integration, staff hiring, and audit prep. For small startups with under 10 employees, 68% say they can’t afford it.
One startup founder in Lisbon told CoinDesk: "We spent 11 months and €420,000 just to integrate the Travel Rule. We’re now profitable - but we’re barely breaking even. If this gets any stricter, we’ll move to Singapore."
And they’re not alone. Deloitte’s 2025 report found that 31% of EU crypto startups are actively considering relocating outside the bloc. The top alternatives? Switzerland (for its clear, pragmatic rules) and Singapore (for its lighter-touch oversight).
What’s Next? The AMLR and 2027 Deadline
The biggest change is coming on July 1, 2027, when the new EU-wide AML Regulation replaces all previous directives. This isn’t an update - it’s a rewrite. Key changes include:
- A €10,000 cap on cash payments for business transactions (even if you’re buying a luxury car with crypto)
- A mandatory 5-day deadline to respond to FIU requests - no more dragging your feet
- Expanded scope: Crowdfunding platforms, football agents, and high-value art dealers will now be classified as obliged entities
- Strict new rules on privacy coins and mixing services - they’ll be banned from regulated platforms
AMLA has already signaled it will crack down on privacy-enhancing technologies in Q1 2026. That means Monero, Zcash, and even privacy features in Bitcoin wallets could be blocked on EU platforms.
Who’s Winning? Who’s Losing?
The numbers tell the story. In 2023, only 41% of crypto trading volume in the EU happened through licensed firms. By September 2025, that number jumped to 78%. Institutional investors - hedge funds, asset managers, pension funds - now refuse to work with unlicensed platforms. PwC’s 2025 survey found that 89% of institutional clients only deal with MiCA-licensed CASPs.
The top 10 regulated firms - Kraken, Bitstamp, Blockchain.com, Coinbase, and others - now control 67% of the EU market. Smaller players are either getting bought out or leaving. The EU didn’t just regulate crypto - it consolidated it.
What Should You Do If You’re a Crypto Business?
If you’re operating in or targeting the EU, here’s your checklist:
- Apply for a MiCA license now - the process takes 9-12 months.
- Integrate the Travel Rule with all six data points - don’t wait for enforcement.
- Hire a full-time MLRO and train staff for 40 hours/year minimum.
- Map out your customer tiers - basic, enhanced, strict - and enforce them.
- Stop using privacy coins or mixing services - they’re effectively banned.
- Prepare for AMLA audits - they’re already reviewing firms in Q2 2026.
There’s no way around this. The EU isn’t asking for cooperation. It’s demanding compliance. And if you don’t meet the standards, you won’t be allowed to operate here.
What About Individuals?
Regular users don’t need to worry about getting licensed. But they’re still affected. If you’re sending crypto from an EU-based exchange to a self-hosted wallet, you might be asked to verify your identity - even for small amounts. Some platforms now block transfers to wallets that haven’t been verified.
And if you’re using a privacy coin? You won’t be able to trade it on EU exchanges anymore. The EU is eliminating anonymity - one wallet at a time.
Do all crypto businesses in the EU need a MiCA license?
Yes. Any entity providing crypto services - including trading, custody, staking, or acting as a gateway to DeFi - must obtain a MiCA license to legally operate in the EU. This applies regardless of where the company is headquartered, as long as it serves EU customers.
What’s the difference between AMLD5, AMLD6, and AMLR?
AMLD5 (2020) was the first EU law to bring crypto businesses under AML rules, requiring registration for exchanges and custodians. AMLD6 (2020) strengthened enforcement by criminalizing non-compliance and expanding liability to senior management. AMLR (effective July 2027) replaces all previous directives with a single, binding regulation that applies directly across all member states without needing national implementation.
Why does the EU’s Travel Rule apply to all transactions, not just large ones?
The EU eliminated minimum thresholds to close loopholes used by criminals. In the U.S., small transfers under $3,000 could be used to launder money without oversight. The EU’s approach assumes that any crypto transaction, regardless of size, could be linked to illicit activity - so all must be traceable.
Can I still use a self-hosted wallet in the EU?
Yes, but with restrictions. If you receive a transfer over €1,000 from a regulated platform, you must verify ownership of the self-hosted wallet. Platforms will block transfers to unverified wallets. You can still send crypto from your wallet - but receiving large amounts will require identity confirmation.
Are privacy coins like Monero banned in the EU?
Yes, effectively. While not explicitly outlawed yet, AMLA has signaled that privacy-enhancing technologies will be prohibited on regulated platforms. As of 2026, major EU exchanges have already delisted Monero, Zcash, and similar coins. Using them on EU platforms is no longer possible.
What happens if I don’t comply with EU AML rules?
Non-compliance can lead to fines up to 5% of annual turnover, suspension of operations, revocation of license, or criminal charges against senior management. AMLA has already fined firms over €10 million for evasion tactics like forum shopping or failing to report suspicious activity.
Final Thought
The EU didn’t create these rules to make life harder for crypto companies. It created them because criminals were already using crypto to move stolen funds, evade sanctions, and launder money. The goal isn’t to kill innovation - it’s to make sure innovation doesn’t become a tool for crime. The companies that adapt are thriving. The ones that resist? They’re disappearing from the market.