CySEC to Rely on EU’s 5th AML Directive to Monitor Cryptos
The Cyprus Securities and Exchange Commission (CySEC) calls for the adoption of the EU’s 5th AML Directive (AMLD5) at a national level, according to a consultative paper released on February 19, 2019. The directive was implemented by the European Union and became active in July of last year. It allows regulators to keep an eye on cryptocurrency-related companies and service providers, with the goal of cutting money laundering and terrorism financing risks. Now the CySEC supports the formalisation of the directive into law.
CySEC to Monitor Cryptos
The move made by CySEC demonstrates that the regulator wants to tighten oversight of cryptocurrencies and crypto-related assets by integrating the EU’s AML rules into the national law, as many cryptocurrency businesses operating in Cyprus currently don’t fall under its legal framework. The circular reads:
CySEC has been contacted by entities engaging in crypto-asset activities; a number of which do not appear to fall within the existing regulatory framework. As a consequence, CySEC considers the transposition of the parts of the AMLD5 concerning crypto asset activities, into national law, as appropriate.
These concerns have become visible since the launch of the CySEC’s Innovation Hub, a fintech-oriented program initiated last year with the intention to support and encourage innovation in the financial sector to ensure a high degree of investor protection and establish the future requirements for new rules and supervisory priorities.
Who May be Affected by These Potential Changes?
According to CySEC, the consultation paper touches upon businesses and entities on the Cypriot territory that take part in the following activities:
Thus, the paper has also an indirect impact on customers who buy, hold or transfer any form of crypto assets.
While the proposed amendments call for the application of the AML/CFT obligations to the use of cryptocurrencies, a final decision will be made after a review of submitted comments from market participants.
Besides, the regulator wants that AMLD5 be gold-plated in line with recommendations from the Financial Action Task Force (FATF) so that the mentioned activities might be governed by the AML/CFT requirements that are not currently part of AMLD5.
The AMLD5 enables regulators to monitor crypto exchanges and digital wallet providers. The directive enforces requirements upon anonymous payments, encouraging a high degree of transparency. All EU members are required to add the AMLD5 to their national laws by January 20, 2020.
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