The Cyprus Securities and Exchanges Commission (CySEC) has called on the country’s government to enact as a national law, the European Union (EU)’s Fifth Anti-Money Laundering (AML) Directive (AMLD5) enforced in July 2018.
As per a consultation paper released by the securities watchdog on Feb 19, its crypto-specific arm know as the CySEC Innovation Hub have received multiple inquiries from industry participants on what AML rules apply to their businesses.
The CySEC believes that implementing the AMLD5 as national law in line with the EU’s order would provide the regulatory clarity that these companies want.
Another benefit mentioned by the CySEC is that the new law would provide more cover for investors who are at the moment storing their funds with firms that do not come “under an existing regulatory framework.”
What Would AMLD5 Bring To The Cyprus Crypto Ecosystem?
For one thing, the EU directive confers on each region the power to monitor the activities of cryptocurrency exchanges, custodians and wallet service providers in the same manner as banking institutions.
It seeks to combat the anonymity feature of cryptocurrency transactions by setting a limit to the volume of transactions that an individual can carry out with verifying their identity with the exchange or wallet provider.
In a nutshell, implementing AMLD5 will among many other things —
reduce the rate of cryptocurrency-related crime and money laundering activities in Cyprus.
confer more public trust on cryptocurrency exchanges, custodians and wallet providers operating within the country.
Additionally, with the CySEC pushing to extend their oversight to crypto to crypto transactions, the watchdog will rely on user data collected from compliant crypto firms to reduce crypto-crime levels to its lowest rate.
Meanwhile, the latest move by regulators in Cyprus align with the declaration it signed with other EU countries in November to foster the growth of blockchain technology within its economy. EU countries have until July 2020 to implement the AMLD5 as a national law.
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