Cyprus to bring all cryptoasset dealings under money laundering rules

Monday, 25 February 2019
The Cyprus Securities and Exchange Commission (CySEC) has issued proposals to bring virtual currency and cryptoasset activities under the ambit of the jurisdiction's anti-money laundering (AML) regime, in line with the provisions of the EU Fifth Anti-Money Laundering Directive (5AMLD).

However, CySEC intends to 'gold-plate' the directive by extending AML obligations to three activities that are not included in the EU 5AMLD, namely:

  • exchanges between crypto assets;
  • transfer of crypto assets; and
  • participation in, and provision of, financial services related to an issuer's offer and/or sale of a crypto asset.

The EU directive only imposes AML regulation on providers who exchange virtual currencies for fiat currencies and vice versa, and on 'custodian wallet providers'. CySEC's proposed rules go much further, covering, for example, initial coin offerings as well.

CySEC says it considers the extension of AML supervision to these transactions to be 'necessary and proportionate', and in line with Financial Action Task Force (FATF) recommendations.

In its October 2018 paper Regulation of Virtual Assets, FATF concluded that distributed ledger and cryptoasset technology presents new opportunities for criminals and terrorists to launder proceeds or finance illicit activities.

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