Issuers of EMTs and scope of application AML requirements

To what extent should electronic money institutions (EMIs) that issue e-money tokens (EMTs) under MiCAR comply with the obligations in relation to anti-money laundering and terrorist financing under Directive 2015/849/EU (as amended, AMLD5)? More specifically, should holders of EMTs be considered as clients of the EMI within the meaning of AMLD5, so that the relevant KYC requirements apply on an ongoing basis in respect of holders of EMTs (not only at the time of issuing but also following trading on the secondary market)?

MiCAR does not specifically address the applicability of AML regulations to issuers of EMTs. If an issuer of EMTs is required to know the identity of the current holder of the EMTs on an ongoing basis, this has implications for their tradability on the secondary market. If the issuer needs to know the identity of the holder of the EMT on a continuous basis (including customer due diligence in respect of any successive new holders) and continuous monitoring needs to take place, it will need to be involved in any transfer of the EMTs following the initial issue. It is important to create clarity on this to the market. As a result of MICAR, the scope of AMLD5 has been enlarged based on Article 38 of the revised Regulation 2023/1113/EU (TFR). A new category of obliged entities has been added to AMLD5, namely crypto-asset service providers (CASPs). However, distribution of EMTs can also take place without the involvement of a regulated CASP, as in the case of peer-to-peer transactions or exchanges that operate outside the scope of MiCAR regulation. The position of the CASP should further be distinguished from the position of the EMI or credit institution issuing EMTs. The latter financial institutions have independent obligations under AMLD5. Also, under MiCAR and TFR, there is no reporting obligation from the CASP to the issuer for EU denominated EMTs as to the identity of a new holder of the EMT (i.e. following a transaction). In view of the application from next June 30 2024 of the new regime under MiCAR for issuing EMTs, it is requested that answers to the above questions be provided urgently. It is of great importance that a uniform application will be followed in this regard, given its substantial practical impact on the actual characteristics of the product range to be developed in the market with regard to EMTs.