CySEC proposes bringing Crypto Asset Activities under the ambit of the AML Law

On 19 February 2019, the Cyprus Securities and Exchange Commission (“CySEC”), issued a consultation paper, for interested market participants to express their views on proposed amendments to the Cyprus AML Law (L. 188(I)/2007 as in force). The proposed amendments extend the scope of Cyprus AML Law in line with the provisions of the EU Fifth AML Directive, by applying anti-money laundering and anti-terrorism financing (“AML/CFT”) obligations to the use of virtual/crypto currencies and assets (“Crypto Assets”). 

Taking into consideration the FATF recommendations, CySEC also seeks comments on its proposal of “gold-plating” the provisions of EU Fifth AML Directive in Cyprus in order to bring the following activities under the AML/CFT obligations (which are not included in the EU Fifth AML Directive):

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

In CySEC’s view, such an extension is necessary and proportionate as it will address the AML risks emanating from Crypto Assets activities in a more comprehensive manner.

The consultation paper (available here) is open for comments until 28 February. Should any market participants wish to advocate any views to CySEC on the proposed changes, our dedicated Financial Services team is available to assist.

For further information please contact Dimitris Papoutsis  or your usual contact at Elias Neocleous & Co LLC.