Crowdfunding Service Providers – EU AML Obligations
Not all crowdfunding service providers currently fall under the Wwft. The AMLR closes this gap by bringing ECSPR-licensed platforms and intermediaries within its scope.
Currently, not all crowdfunding service providers are considered obliged entities under national AML (anti-money laundering) legislation, such as the Wwft. Upcoming EU AML rules close this gap by bringing ECSPR-licensed platforms and intermediaries within its scope.
Changes for crowdfunding under the EU AML package
Currently, certain crowdfunding service providers fall within the scope of the Dutch Anti-Money Laundering and Counter-Terrorist Financing Act (Wwft), provided they meet the definitions under the Dutch Financial Supervision Act (Wft):
- If the financing is based on equity (i.e. investors receive shares in return), the activity generally falls under investment services or the offering of participation rights in investment institutions.
- If the financing is based on debt (i.e. investors lend money to the project owner), it falls under credit provision or mediation in credit.
The AMLR adds another category to this: parties that provide crowdfunding services under an exemption to mediate in the attraction of repayable funds from the public. The Crowdfunding Service Regulation (ECSPR), which has been in force since 10 November 2021, did not bring this group within the scope of the Wwft. The ECSPR applies to providers who match business financing interests between investors and project owners, using the types of services described above.Under the AMLR, both crowdfunding service providers and crowdfunding intermediaries (as defined in Article 3 of the AMLR), including those already licensed under the ECSPR, will now fall under the EU’s anti-money laundering framework.
Why are there changes in AML obligations for the crowdfunding industry?
The EU aims to reduce the risk of money laundering through alternative financing models and to avoid the emergence of an unregulated shadow market. It also seeks to increase transparency in this fast-growing sector and ensure consistent rules within the EU market.
AML obligations for crowdfunding providers
Relevant crowdfunding service providers will be required to:
- conduct customer due diligence (CDD),
- monitor transactions, and
- report suspicious activities to the Financial Intelligence Unit (FIU).
While the detailed technical requirements are still under development, the general obligations are already clear.
Examples of key requirements include:
- identifying and verifying the identity of clients (including prospective and actual investors and project owners),
- identifying and verifying the beneficial owner,
- understanding the ownership and control structure of the client,
- establishing the source of funds, the purpose and intended nature of the transaction and business relationship,
- conducting sanctions screening, and
- documenting and assessing all money laundering and terrorist financing risks.
Crowdfunding providers and intermediaries will also be required to establish a comprehensive AML policy, including risk assessments, an adequate governance structure, internal control systems, and training programmes for staff.
The entities will be subject to regulatory supervision, including by AMLA (the new European anti-money laundering authority) and/or national supervisory bodies. They should also prepare for increased administrative burdens such as mandatory data reporting and possible structural adjustments to ensure effective risk control.
When do the EU AML rules apply?
The EU AML rules will become generally applicable across the EU from mid-2027. In the meantime, AMLA will play an active role in drafting regulatory technical standards and guidelines that will provide further clarity on implementation.
Risks of non-compliance for crowdfunding platforms
Failure to timely comply with the EU AML rules may lead to serious consequences. Supervisory authorities may impose significant fines and take binding enforcement measures against non-compliant entities. Non-compliance can also lead to reputational damage and loss of trust from investors and other stakeholders, potentially resulting in substantial financial losses.
Risks of AMLR non-compliance for crowdfunding platforms
Failure to comply with the new EU AML rules in time can lead to serious consequences. Supervisory authorities may impose significant fines and take binding enforcement measures against non-compliant entities. Non-compliance can also lead to reputational damage and loss of trust from investors and other stakeholders, potentially resulting in substantial financial losses.
Exemptions and thresholds for the crowdfunding industry
There are no standard exemptions.
However, EU Member States are allowed to exclude certain types of organisations from specific obligations through national laws or policies, under strict conditions. To qualify, the entity must:
- present a demonstrably low risk of money laundering or terrorist financing,
- implement adequate mitigating measures (e.g. through the use of regulated payment service providers),
- and must not operate on a commercial basis.
These exemptions must be justified and documented by the Member State, and the European Commission may review and assess them.
Even in cases of exemption, institutions must remain transparent in their operations and cooperate with supervisory authorities. Misuse of an exemption may still lead to enforcement measures.
Curious how the AMLR affects other non-financial sectors?
Read more on how it impacts luxury goods dealers, football clubs, and football agents.
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