CySEC (The Cyprus Securities and Exchange Commission) have issued proposals to bring virtual currency and crypto asset activities under the sphere of the jurisdiction’s anti-money laundering (AML) regime, as per the provisions of the EU Fifth Anti-Money Laundering Directive (5AMLD).
The EU Directive only imposes Anit-Money Laundering regulations on custodian wallet providers and providers who trade virtual currencies for legal tender. CySEC’s proposed regulations widen in order to catch further digital assets such as initial coin offerings (ICOs), other virtual currencies as well as blockchain trading.
However, CySEC intends to fast-track the implementation process to the Directive by extending AML obligations to three additional activities that are excluded from the EU 5th Anti-Money Laundering Directive (5 AMLD), namely:
Exchanges between virtual currencies & crypto assets.
The transferal of virtual currencies & crypto assets.
The provision of crypto and digital based financial services.
The participation in financial service activities related to an issuer’s offer or sale of a crypto or digital asset.
CySEC has shown support of the widening AML management to these transactions, stating that they are ‘essential, proportionate and in line with Financial Action Task Force (FATF) list of acceptable practices’.
Last October in 2018 the Regulation of Virtual Assets, was released by the FATF; a paper that concluded several negative elements to crypto asset technology. The paper focused on how distributed ledger technology offers new opportunities for criminals and terrorists to launder proceeds and profit from unlawful activities.