Summary of CySEC's Circular C478
Memo #51-2021
CySEC Circular No: C478
Date: 21/12/2021
Subject: National Risk Assessment on Money Laundering and Terrorist Financing Risks with respect to Virtual Asset and Virtual Asset Service Providers
Purpose: To inform the Regulated Entities on the results of the ‘NRA on ML/TF risks of Virtual Assets Activities and Virtual Asset Service Providers, published by the Ministry of Finance of the Republic of Cyprus.
In Summary:
CySEC has issued the Circular C478 on 21/12/2021 to inform the CIFs, ASPs, UCITS Management Companies, Internally managed UCITS, AIFMs, Internally managed AIFs, Internally managed AIFLNPs, Companies with sole purpose the management of AIFLNPs, Crypto Asset Service Providers and Small AIFMs under Law 81(I)/2020, on the results of the National Risk Assessment (the ‘NRA’) on Money Laundering and Terrorist Financing (‘ML/TF’) risks of Virtual Assets (‘VA’) Activities and Virtual Asset Service Providers (‘VASPs’), which was published by the Ministry of Finance of the Republic of Cyprus.
The NRA was prepared by a specialised US Advisory Firm, with expertise in FinTech & RegTech and Crypto Asset technology.
The NRA report focus on the ML/TF risks posed by VA and VASPs, by identifying and assessing the risks that may arise in relation to the use of these new technologies. In addition, it includes recommendations and other appropriate measures in order to manage and mitigate those risks, as required by the relevant FATF’s Recommendations.
The CySEC notes that it considers the NRA Report to be of assistance to the Regulated Entities engaging or seeking to engage in VA activities, in understanding their AML/CFT risks and obligations and how they can effectively comply with these obligations.
The CySEC expects that all Regulated Entities study the Report in depth, as its content should be taken into account when assessing AML/CFT risks, thereby improving the effectiveness of the measures and procedures applied.
The CySEC further informs that it has already commenced the implementation of measures/actions in order to address the identified risks. CySEC has issued the Policy Statement PS-01-2021 to outline its approach on the registration and operations CASPs under the AML/CFT Law, the CySEC Directive for register of CASPs and Circular C476 relating to the FATF’s Guidance on Risk-based Approach for Virtual Assets and Virtual Asset Service Providers.
CySEC also informs that is in the process of amending its Directive for the Prevention and Suppression of Money Laundering and Terrorist Financing, to accommodate the FATF Recommendation regarding virtual asset transfers.
The NRA can be found on the following link: http://mof.gov.cy/assets/modules/wnp/articles/202112/1033/docs/cyprus_nr_virtual_assets_nov2021.pdf
The Policy Statement PS-01-2021 can be found on the following link: https://www.cysec.gov.cy/CMSPages/GetFile.aspx?guid=13075523-a19e-43d9-8cce-e2c0e0f5bca9
The CySEC Directive for register of CASPs can be found on the following link: https://www.cysec.gov.cy/CMSPages/GetFile.aspx?guid=63682c11-468f-49f4-a6fb-4b0138b97e17
The Circular C476 can be found here: https://www.cysec.gov.cy/CMSPages/GetFile.aspx?guid=2b1cba66-fc54-42c9-86f1-7a8708dfaf96
Read the CySEC Circular C478
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