February 20, 2019 AtoZ Markets – The financial regulatory body of Cyprus – Cyprus Securities and Exchange Commission (CySEC), has issued a press release today, which states that the transposition of the provisions of the fifth AML Directive (AMLD5) into national law. The CySEC wants to increase the exposure in surveillance of cryptocurrencies by integrating EU anti-money-laundering regulations into Cyprus laws.
A press release which was updated on CySEC’s website, stated that:
“Since launching the CySEC Innovation Hub, 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.”
Moreover, derivatives which are referencing cryptocurrency would not fall under this rules and they still remain under the subject to ESMA’s current restrictions and any future proposals by the CySEC related to trade of these instruments falls to retail investors.
Cryptocurrency platforms to face strict AML rules
The AMLD5 is a pan-European anti-money laundering directive that member states will have until January 2020 to implement it into their national laws. This legislation is important as it represents the EU’s first attempt to regulate cryptocurrency activities in European Union. For the first time under AMLD5 rule, cryptocurrency exchanges and wallet providers will be brought within the scope of EU anti-money laundering regulations. This law imposes registration and customer’s KYC requirements that force operators to disclose their traders’ identities and to report fishy activity.
Taking into consideration the Financial Action Task Force (FATF) recommendations, CySEC has also advises on gold-plating AMLD5 in order to bring the following activities under the AML/CFT obligations, which are not included in AMLD5.
As per the report, these activities includes:
- 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 point of view, such action is necessary and proportionate as it will address the AML risks, which could emanate from crypto assets activities in a more comprehensive way.
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