Recent amendments to the serial 2 and 4 of the Third Schedule of the Anti-Money Laundering and Countering the Financing of Terrorism Act 2020 (“AML/CFT Act”) now require reporting entities under the AML/CFT Act to file Cash Transaction Threshold Reporting (“CTTR”) and Wire Transfer Transaction Reporting (“WTTR”) with the Financial Intelligence Unit Seychelles (“FIU”), as per the following:

1. REPORTING THRESHOLD APPLICABLE TO WIRE TRANSFERS

“Every financial institution that sends domestically or cross-border or receives cross-border wire transfers, including electronic fund transfers, shall report all wire transfers of SCR50,000 or more of the equivalent money in the currency of other countries.”

1. REPORTING THRESHOLD APPLICABLE TO BUREAU DE CHANGE

“Every Bureau de Change, including banks acting as Bureau de Change for forex trading in respect of persons who are not their customers shall report all transactions of its customers involving SCR 5,000 or more or the equivalent money in the currency of other countries.”

Revised FIU Guidelines and Reporting Templates

Further to the above legislative amendments, the FIU has revised its guidelines and reporting templates in relation to both WTTR and CTTR. The revised guidelines and reporting templates can be accessed here.

Submissions to the FIU

The submissions based on the amended provisions of the AML/CFT Act shall commence on 1 May 2021.  All submissions shall be made using the revised Forms, which shall include retrospective cash transactions or wire transfers, that have been effected on or after 5 March 2021.

Please note that Threshold Reporting is not a new obligation. Therefore, all reporting entities which are currently submitting Threshold Reports to the FIU are required to continue with their submissions, as per the current established procedures, until 30 April 2021.

What is a Threshold Report?

A Threshold Report is a report that reporting entities are required to file with the FIU for executing cash transactions or wire transfers above the prescribed threshold limit.

The threshold reporting obligation is clearly defined in the AML/ CFT Act 2020, Section 5 of the AML/ CFT Act creates the obligation on reporting entities to file CTTR and WTTR with the FIU in the manner prescribed by the FIU.

Our Team at FiveComply can assist you comply with the abovementioned obligations. Do not hesitate to contact us.

CySEC has issued Circular C435 in order to inform Cyprus Investment Firms (‘CIFs’) which intend to provide investment and/or ancillary services and/or perform investment activities in the territory of Czech Republic, to CNB’s regulatory rules regarding the persons that are allowed to provide such services.

On 24 March 2020, the Czech Parliament adopted the Act No. 119/2020 Coll., which amended Act No. 256/2004 Coll., (hereinafter the “Amended Act”), being the Czech national law transposing MiFID II. Under Section 25 of the Amended Act, investment firms established in other EEA Member States providing cross-border services to retail clients and professional clients on request under MiFID II passport are allowed to provide services under the freedom to provide services (i.e. without establishing a branch), with respect to Article 57 TFEU, only on a temporary or occasional basis.

Pursuant to Section 25 of the Amended Act, if non-Czech investment firms are presumed to provide investment services to retail and professional on request clients on a permanent basis, such firms will be under a strict obligation to establish a branch in the Czech Republic, and may only provide investment services under Article 35 of MiFID II (establishment of branch). The requirement for the establishment of a branch does not apply for investment services provided to professional clients by default (as per Section 2a of the Amended Act).

Section 25(1) of the Amended Act provides as follows:

“A foreign person authorised by the supervisory authority of another EU member state to provide investment services may provide investment services, for which it has such authorisations of its supervisory authority of the home state, in the Czech Republic without location of a branch in the Czech Republic in compliance with the EU legislation, temporarily or occasionally, if it is not investment services provided to professional clients pursuant to Section 2a, to whom investment services can be provided in this way even permanently. The CNB shall inform this person without undue delay that it has received data from the supervisory authority of the home state concerning the intended provision of investment services by this person in the Czech Republic.”

Our team at FiveComply remains at your disposal and can help you comply with the abovementioned obligations.

Directive (EU) 2021/338 of 16 February 2021 was introduced to amend Directive 2014/65/EU (‘MiFID II’), as regards information requirements, product governance and position limits, and Directives 2013/36/EU and (EU) 2019/878 as regards their application to investment firms, to help the recovery from the COVID-19 crisis.

One of the most important amendments introduced was the temporary suspension of the RTS 27 reporting requirements, as they were deemed “not to enable investors and other users to make any meaningful comparisons on the basis of the information they contain” (Recital 9 of the Directive (EU) 2021/338).

Thus, in Article 27(3) of the MiFID II, the following subparagraph has been added:

“The periodic reporting requirement to the public laid down in this paragraph shall not apply until 28 February 2023. The Commission shall comprehensively review the adequacy of the reporting requirements laid down in this paragraph and submit a report to the European Parliament and the Council by 28 February 2022”.

The Directive (EU) 2021/338 has entered into force on 27 February 2021. 

It remains to be seen how CySEC will implement those amendments on a national level, as EU Directives are not directly effective but need to be enacted by national legislation. However, it is expected that all EU regulators will adopt this.

Our team of experts at FiveComply will keep you posted on any updates.

Reporting Entities under the First Schedule of the Anti-Money Laundering and Countering the Financing of Terrorism Act 2020 (‘AML/CFT Act’) have an obligation until 1 April 2021 to register with the Seychelles Financial Intelligence Unit (‘FIU’) registration system, GoAML.

Pursuant to Section 31 of the AML/CFT Act and Regulation 7 of the Anti-Money Laundering and Countering the Financing of Terrorism Regulations 2020 (‘AML/CFT Regulations’), all Reporting Entities have an obligation to register with the Financial Intelligence Unit (‘FIU’) within 60 days of the coming into force of the AML/CFT Regulations or commencement of its business (i.e. 1 April 2021).

The link to access the online GoAML platform can be found here; it includes guidelines on the registration process and other relevant details/information on how to register.

Our team at FiveComply may help you with your registration and to stay compliant with the regulatory requirements imposed by the Financial Services Authority Seychelles.

On the 18^th of February 2021, the House of Representatives in Cyprus has voted in favour of the transposition of the 5^th AML Directive (‘AMLD5’) into national legislation. As a result, on the 23^rd of February 2021, Law 13(I)/2021 was published in the Official Government Gazette, amending the current AML legislative scheme in Cyprus (‘the AML Law’).

This is considered as a huge step towards the recognition of crypto-assets which have been approached with caution due to the lack of a clear legislative approach within the EU.

In summary, the implementation of the AMLD5 into national legislation will affect the approach taken towards cryptocurrencies, due to the following regulatory developments:

• The scope of the crypto-asset activity is now defined.
• Crypto-asset service providers dealing with exchanges between crypto assets or exchanges between crypto assets and fiat currencies, custodian wallet providers and other financial services related to crypto-assets are now considered ‘obliged entities’ and are subject to the AML Law. This will enable monitoring and consequently a higher degree of transparency.
• Initiation of a Public Registry relating to crypto-asset service providers that will be operated and kept by the Cyprus Securities and Exchange Commission (‘CySEC’). Relevant service provides shall file an application with CySEC, as per the applicable requirements.
• Registered crypto-asset providers will be able to offer their services in Cyprus and/or from Cyprus.
• To combat the risks related to the anonymity, Financial Intelligence Units (FIUs like MOKAS) should be able to obtain information allowing them to associate cryptocurrency addresses to the identity of the owner of cryptocurrencies.

The introduction of the abovementioned legislative provisions will also have an impact on the way banks treat crypto-assets within Cyprus and in general, within the EU. Until now, most of the EU credit institutions had policies of rejecting crypto-asset service providers with the latter being deprived of access to the bank system.

However, this is about to change, as crypto-asset service providers shall now be treated as ‘obliged entities’ under the AML Law, and therefore, merely the fact that, crypto-asset activities are being offered, does not constitute a reason for rejection anymore. The notion will be that, each case will be assessed on a case-by-case basis with crypto-assets service providers to be able to access the bank system, once they show compliance with the AML legislation.

Certified persons that are registered in the CySEC Public register should renew their registration for 2021, until 28 February 2021.

The renewal procedure must be performed online through the CySEC website, by completing the Renewal application and paying to CySEC the annual renewal fee of eighty euro (€80).

Certified persons must confirm on the renewal application, that they have completed by the end of 2020, continued professional training seminars that relate directly to their duties of:

1. ten (10) hours for persons registered in the Public register for the basic examination;
2. fifteen (15) hours for persons registered in the Public register for the advanced examination;
3. ten (10) hours for persons registered in the public register for AML compliance officers.

For the persons that are registered both in the public register for the basic examination and the AML compliance officers’ register, they must confirm that they have completed by the end of 2020, seminars of a duration of five (5) hours for persons registered in the public register for the basic examination, plus ten (10) hours for persons registered in the public register for AML compliance officers – being a total of fifteen (15) hours for both renewals.

For the persons that are registered both in the public register for the advanced examination and the AML compliance officers register, they must confirm that they have completed by the end of 2020, seminars of a duration of ten (10) hours for persons registered in the public register for the advanced examination plus ten (10) hours for persons registered in the public register for AML compliance officers – being a total of twenty (20) hours for both renewals.

CySEC on 2^nd February 2021, issued Circular C426 which analyses the new prudential framework that the investment firms will be subject to. More specifically, on 26^th June 2021, the Investment Firms Regulation (EU) 2019/2033 (‘IFR’) and Investment Firms Directive (EU) 2019/2034 (‘IFD’) comes into force, thus, all CIFs should comply with the new prudential regime which is different and independent from the Regulation EU No. 575/2013 (CRR) and Directive DI144-2014-14 which are applicable today.

Some of the main changes that the new prudential framework shall introduce are the following:

Initial capital requirements

New initial capital requirements for the authorization of all Investment Firms required pursuant to Art.15 of Directive 2014/65/EU (section 16 of the Law) to provide any of the investment services and/or perform any of the investment activities listed below:

The initial capital of an Investment Firm shall consist of the Common Equity Tier 1 capital (‘CET1’), Additional Tier 1 capital (‘AT1’) and Tier 2 capital (subject to certain conditions – Art. 9 of IFR).

European Banking Authority (‘EBA’) published seven final draft technical standards regarding IFD/IFR  

EBA published a package of seven (7) final draft Regulatory Technical Standards (RTS) related to the implementation of IFR and IFD which have been submitted to the European Commission.

These final draft RTS, which are part of the phase 1 mandates of the EBA roadmap on investment firms, will ensure a proportionate implementation of the new prudential framework for investment firms taking into account the different activities, sizes and complexity of investments firms.

The relevant RTS can be found here.

Reporting and disclosure requirements under IFR/IFD

On 4th June 2020, the EBA issued its draft Implementing Technical Standards (ITS) on reporting requirements for investment firms under Article 54(3) of IFR and on disclosures requirements under Article 49(2) of IFR.

Along with the ITS, EBA introduced a set of templates and instructions for class 2 investment firms (Annexes I and II of the Draft ITS) and a set of templates and instructions for class 3 firms (Annexes III and IV of the Draft ITS), where the supervisory reporting framework incorporates different and tailored reporting templates with different frequencies.

The templates mentioned above can be found here.

Actions to be taken by the CIFs

CIFs are urged to study the IFR/IFD carefully, along with the final draft RTS issued, so as to:

a) Identify the class they will be categorized at from 26th June 2021,*

b) Familiarise themselves with the new templates and the way their new capital requirement will be calculated,*

c) Identify the data needed to be collected and reported, especially in regards to the calculation of K-Factors,*

d) Review their internal records and systems and make the necessary changes to ensure that the required data for the K-Factors (i.e. assets under management, daily trading flow, clients’ orders held, etc) will be available to calculate their new capital requirements. This information should be readily available at all times.

CIFs should make their own assessment on the impact that the IFR and IFD will have on their own funds, concentration risk, liquidity risk, disclosure, reporting, remuneration requirements and take the necessary early actions to ensure compliance by the date of entry into force i.e. on 26^th June 2021.

*CIFs should also consult the CySEC practical guide for the new prudential framework for Investment Firms, which can be found here.

You can contact our firm for more information and guidance.

On behalf of our client, a Group of Companies that owns regulated investment firms both EU and non EU, we are looking for an experienced Group Head of Compliance. The successful candidate will ensure that each entity within the Group implements regulations in all aspects and levels of its business activities as well as provide guidance on professional matters, with goal to preserve the Group’s integrity and high ethical standards.

If you are interested in the above position please send your CV to our HR team at hr@fivecomply.com. Due to the high volume of applications we receive at FiveComply, only shortlisted candidates will be responded to.