The Fifth Anti-Money Laundering (AML) Directive, implemented originally by the European Union (EU), became active in July of 2018. The directive made it possible for the EU’s regulators to monitor crypto-related businesses and service providers, based on the intention of reducing the risk of money laundering and terrorism financing. The directive has now been transposed as the new framework for the Cyprus Securities and Exchange Commission (CySEC) as well, according to an announcement and consultation paper on February 19th.
In this directive, the regulators are able to oversee cryptocurrency exchanges, as well as wallet providers. They will be establishing and enforcing requirements upon anonymous payments, making them transparent. The policy does not exempt transactions made on exchanges or with the use of prepaid cards, giving the regulators a clearer picture of potential wrongdoings in the industry. Any EU member country is required to add this directive to their national laws by January 20th next year.
There have been many inquiries submitted to CySEC’s Innovation Hub, which are mostly from crypto-related entities. The big concern amongst these platforms and firms is that they presently do not “appear to fall within the existing regulatory framework.” However, if they want to remain active, it is crucial to abide by the current regulations in the area, or they could face legal action.
Right now, the AML/CFT obligations are not included in the AMLD5 provisions, but the new law would pertain to the following crypto-related activities: “a) exchange between crypto assets, b) transfer of virtual assets, and c) participation in and provision of financial services related to an issuer’s offer and/or sale of a crypto asset.”
The consultation paper of CySEC says that the extension is due to the
“judgment of the potential risk posed to investors’ protection and the integrity of the market, and the industry-accepted definitions.”
Ireland’s cabinet has already approved the necessary bill that would cause AMLD5 to go into effect within their borders.
Cyprus released a declaration that was in favor of the promotion of using distributed ledger technologies (DLTs) in the area. Their stance was supported by six other southern EU member states. The republic’s national investment partner, Invest Cyprus, signed a memorandum of understanding (MoU) in the fall last year with VeChain Foundation, a blockchain platform in Singapore. Their collaboration is meant to work on creating a welcoming environment for blockchain innovation at a national level.
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