CySEC has issued Circular C478 on 21 December 2021, informing Regulated Entities (i.e., CIFs, ASPs, UCITS, AIFMs, AIFs, AIFLNPs, CASPs, etc.) on the result 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 Report focuses on the ML/TF risks imposed by VA and VASPs, by identifying and assessing the risks that may arise through 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.
CySEC 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. Therefore, CySEC expects that all Regulated Entities study the Report in depth, as its contents should be taken into account when assessing AML/CFT risks, thereby, improving the effectiveness of the measures and procedures applied.
CySEC has already commenced the implementation of measures/actions in order to address the identified risks by issuing:
- the Policy Statement PS-01-2021 (available here) to outline its approach on the registration and operations CASPs under the AML/CFT Law,
- the CySEC Directive for registration of CASPs (available here), and
- the Circular C476 (available here) relating to the FATF’s Guidance on Risk-based Approach for VA and VASPs.
Lastly, CySEC 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.
Our team shall keep you updated on future updates!
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