National Risk Assessment on Money Laundering and Terrorist Financing Risks
Circular C478 National Risk Assessment on Money Laundering and Terrorist Financing Risks with respect to Virtual Asset and Virtual Asset Service Providers
With this Circular C478 the Cyprus Securities and Exchange Commission (‘the CySEC’) wishes herein, to inform you 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 on the website of the Ministry of Finance (available here).
The NRA report focuses 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. Additionally and in particular to FATF Recommendation 15, it also includes recommendations and other appropriate measures in order to manage and mitigate those risks.
One of the purposes of publishing the NRA Report on the website of the Ministry of Finance, is to provide appropriate information to you, in order to carry out your own risk assessment of ML/TF risks in relation to VA activities, as provided for in articles 57(1)(b1)(v) and 58A of the Anti Money Laundering/Combating the Financing of Terrorism Law (AML/CFT Law). The NRA results are an important source of information, which you need to consider when identifying and assessing money laundering and terrorist financing risks.
The CySEC considers the NRA Report to be of assistance to you, engaging or seeking to engage in VA activities, in understanding your AML/CFT risks and obligations and how you can effectively comply with these obligations. Hence, the CySEC expects that you will 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 implementation of measures/actions by CySEC has already commenced in order to address the identified risks. CySEC has issued a Policy Statement on the Registration and Operations of Crypto Asset Services Providers (‘CASP’) – 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. In addition, 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 often referred to as the “FATF Travel Rule”.
The CySEC, remains committed to taking all the necessary measures to address the recommendations recorded in the NRA Report, in order to manage and mitigate the money laundering and terrorist financing risks of VA and VASPs .
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Written by Evangelia Vroullidou.