In an effort to regulate crypto asset firms as well as minimizing the risks associated with money laundering from illegal activities, Cyprus is considering imposing stricter laws in the country which include fining defaulters up to €350,000 ($370,000).
As per a recent local media report, the Cypriot Ministry of Finance is planning to make changes to the existing Prevention and Suppression of Money Laundering Law. The ministry has put forward its list of suggested amendments to the Parliamentary Committee on Legal Affairs.
The amendments aim to align Cyprus with international standards set by the Financial Action Task Force (FATF) to tackle money laundering from illegal activities and the financing of terrorism, as well as the recommendations of the MONEYVAL report published in November 2022.
Under the amendments, every service provider dealing with crypto assets is mandated to register with the country’s financial regulator, the Cyprus Securities and Exchange Commission (CySEC).
Any crypto service provider that fails to comply with the regulations will face penalties such as a hefty fine of €350,000, ,imprisonment of up to five years, or even a combination of both.
Notably, the amendment by the CySEC was met with reservations from the Cyprus Bar Association. The demand that raised concerns is the specification that crypto service providers with licenses from other European countries must also register with the CySEC.
The bar association also recommended the incorporation of the “Travel Rule” into the law. Currently, the provision is not a part of Cyprus’ legislative framework.
In response, the Finance Ministry said that the law is consistent with the single market functioning within the European Union (EU). They underline how CySEC holds authority over crypto firms providing services in Cyprus, regarding their regulatory status in other European states.
Regarding the “Travel Rule,” the Ministry of Finance pointed out that discussions with relevant authorities are ongoing to ensure the proper and timely implementation of this regulation, with necessary modifications to Cyprus’ existing legislation.
Cyprus is one of the European jurisdictions known for its crypto-friendly approach. Many crypto firms have little or no major issues registering in the country. For instance, Bybit received a license to operate in the country in June. The firm eToro also received a crypto asset service provider registration from the CySEC in September.
