AML Requirements for Crypto Businesses in the EU: What You Need to Know in 2025

If you're running a crypto business in the European Union, you're not just dealing with technology-you're navigating one of the strictest financial regulatory systems in the world. Since 2020, the EU has been steadily tightening the screws on cryptocurrency companies, and by 2025, the rules aren't just recommendations-they're legally enforceable obligations with real penalties. Failure to comply isn't just a fine; it's a shutdown. This isn't about being cautious. It's about survival.

What Exactly Counts as a Crypto Business Under EU Law?

The EU doesn't just regulate Bitcoin exchanges anymore. Under MiCA (Markets in Crypto-Assets Regulation), any company offering crypto services needs a license. That includes:

• Fiat-to-crypto exchanges (like buying BTC with euros)
• Custodial wallet providers (holding keys for customers)
• Crypto trading platforms
• Stablecoin issuers
• Crypto asset brokers and dealers

Even if you're just helping someone swap one token for another, you're now a Crypto-Asset Service Provider (CASP)-and you need authorization. As of September 2025, 217 companies have earned full MiCA licenses across the EU. That number was just 42 a year earlier. The bar is high, and the rush to qualify is real.

The Core AML Rules You Can't Ignore

AML requirements for crypto businesses in the EU are built on three pillars: know your customer, monitor everything, and report anything suspicious.

Customer Due Diligence (CDD) isn't optional. You must verify every user’s identity before they can trade. The level of verification depends on how much they're moving:

• Under €1,000: Name, address, date of birth
• €1,000-€10,000: Government-issued ID + proof of address
• Over €10,000: Full source of funds check, senior management approval, and ongoing monitoring

You can't skip this. The EU bans anonymous crypto transactions entirely. No more ‘just send me some ETH’ without ID. That’s different from places like Switzerland, where some pseudonymity is still allowed.

Transaction Monitoring means your system must flag unusual activity automatically. If a user suddenly sends €50,000 to a new wallet they’ve never interacted with, your system needs to alert your compliance team. Suspicious Activity Reports (SARs) must be filed with your national Financial Intelligence Unit (FIU)-and you have to do it within 48 hours.

The Travel Rule is the most disruptive change. Unlike the U.S., where it only applies to transfers over $3,000, the EU applies it to every crypto transfer above €1,000. You must collect and send six data points for each transaction:

• Originator’s full name
• Originator’s account number or wallet address
• Originator’s physical address or date of birth
• Beneficiary’s full name
• Beneficiary’s account number or wallet address
• Beneficiary’s physical address

And here’s the catch: you must verify self-hosted wallets (like MetaMask) if the transfer exceeds €1,000. That means if someone sends you ETH from a wallet you don’t control, you have to confirm who owns it-or block the transaction.

The New Boss: AMLA

In 2025, the European Union launched the Anti-Money Laundering Authority (AMLA). Based in Frankfurt, it’s now the central enforcer for crypto AML rules across all 27 member states. Before AMLA, each country had its own rules, enforcement style, and penalties. Now, there’s one supervisor with real teeth.

AMLA doesn’t replace national regulators-it coordinates them. It can launch cross-border investigations, impose fines directly on non-compliant firms, and demand access to internal records. In its first 6 months, AMLA opened 12 formal investigations into CASPs for failing to implement the Travel Rule properly.

AMLA Chair Bruna Szego made it clear: “We welcome innovation-but not at the cost of financial integrity.” That’s the EU’s mantra.

What Happens If You Don’t Comply?

Penalties aren’t just financial-they’re existential.

• Fines can reach up to 5% of your annual turnover or €5 million, whichever is higher.
• Serious breaches can lead to license revocation-meaning you can’t operate anywhere in the EU.
• Senior executives can be held personally liable. If your compliance officer ignores red flags, you could face criminal charges.

One Estonian crypto firm processed €187 million in transactions through a Gibraltar entity to avoid stricter local rules. Both national authorities fined them. The company shut down within 90 days.

And it’s not just about fines. Your reputation is on the line. Institutional investors won’t touch unlicensed platforms. As of 2025, 89% of institutional crypto trading in the EU happens on MiCA-licensed platforms. If you’re not licensed, you’re invisible to the big players.

How Much Does Compliance Actually Cost?

Let’s be honest: this isn’t cheap.

Setting up full AML compliance for a mid-sized CASP typically costs between €350,000 and €500,000. That includes:

• Hiring 3-5 full-time compliance staff
• Buying or building AML monitoring software
• Integrating with 28 different national FIUs (yes, each country has its own system)
• Training all employees (40 hours/year for compliance staff, 16 for everyone else)

One major exchange, Kraken, spent €2.1 million just to connect to all EU FIUs for Travel Rule compliance. Smaller firms are struggling. According to the European Commission’s 2025 SME Impact Assessment, 68% of crypto startups with fewer than 10 employees say compliance costs are prohibitive. Over 40% have scaled back or left the EU entirely.

Some are turning to middleware solutions like the Traveler platform. Bitstamp and Blockchain.com cut their Travel Rule setup time from 6 months to 8 weeks by using it-though it still cost them €420,000 upfront.

What About DeFi? The Big Gray Area

Here’s where the EU’s rules start to crack.

DeFi protocols-like Uniswap or Aave-don’t have a company, CEO, or registered office. They run on code. The EU’s AML rules were written for centralized businesses. So who’s responsible when someone uses a DeFi app to launder money?

German regulator BaFin documented cases in early 2025 where criminals used DeFi bridges to move illicit funds across chains, bypassing all traditional AML checks. But because there’s no entity to license, no one to fine, and no one to subpoena, regulators are stuck.

Professor Angela Walch from the University of Texas called this a “regulatory blind spot.” The EU hasn’t yet defined how to apply AML rules to decentralized protocols. That’s a major loophole-and one criminals are exploiting.

How the EU Compares to the Rest of the World

The EU is the most aggressive regulator when it comes to crypto AML.

• U.S.: Fragmented. Multiple agencies (FinCEN, SEC, CFTC) claim authority. Travel Rule only applies above $3,000. Enforcement is inconsistent.
• UK: Similar to EU but slower to implement MiCA-style rules. No centralized authority yet.
• Singapore: Clear rules, faster licensing, lower costs. Many firms moved here to avoid EU overhead.
• Switzerland: Allows pseudonymous wallets. Less intrusive than the EU.

The EU’s advantage? Uniformity. One rulebook across 27 countries. That’s a huge win for big players. Coinbase says having a single EU license cut their operational complexity by 70% compared to dealing with 27 separate regimes.

But the cost? It’s pushing innovation out of Europe. Deloitte predicts 31% of crypto startups will relocate to Switzerland or Singapore by 2027 because they can’t afford the compliance burden.

What’s Coming in 2026-2027?

The EU isn’t done. The new EU-wide AML Regulation takes effect July 1, 2027. It will replace all previous directives and create a single, binding rulebook.

Key changes coming:

• 5-working-day deadline to respond to FIU requests (currently varies by country)
• Cash payment cap of €10,000 for business transactions
• Mandatory verification for cash payments over €3,000
• New obliged entities: crowdfunding platforms, football clubs, high-value goods traders
• Strict rules on privacy coins and mixing services-banned outright

AMLA will also release new guidance in Q1 2026 on how to detect and block transactions using privacy-enhancing technologies. That means Zcash, Monero, and even certain mixers will be effectively outlawed for EU-based services.

What Should You Do Right Now?

If you’re operating a crypto business in the EU:

1. Check if you’re already licensed under MiCA. If not, start the application process immediately-it takes 9-12 months.
2. Implement tiered CDD based on transaction size. Don’t wait for AMLA to come knocking.
3. Integrate the Travel Rule. Use a proven middleware solution if you can’t build it in-house.
4. Train your team. Quarterly AML knowledge tests are mandatory.
5. Document everything. Regulators will ask for logs, approvals, training records, and SAR filings.
6. Don’t try to game the system. Forum shopping (registering in Malta to avoid Germany) is being actively hunted.

Compliance isn’t a cost center-it’s your license to operate. The EU is building a financial system where crypto is allowed, but only if it plays by the rules. There’s no middle ground.