The Cyprus Securities and Exchange Commission (CySEC) has issued proposals to bring virtual currency and crypto asset 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:
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 crypto asset technology presents new opportunities for criminals and terrorists to launder proceeds or finance illicit activities.
Comments must be submitted by 28 February.