Crypto enterprises that operate within Cyprus without proper registration may soon face significant fines, potentially reaching up to $350,000, while individuals responsible for such enterprises could potentially be subject to imprisonment for a maximum of five years. These measures are part of a proposal set forth by the Finance Ministry, recently submitted to the parliament, with the aim of harmonizing the nation’s regulations with the standards outlined by the Financial Action Task Force (FATF).
The Draft Under Scrutiny by the Parliamentary Committee on Legal Affairs
Reports suggest that Cypriot authorities are considering imposing substantial penalties on crypto enterprises that neglect to register with the appropriate regulatory authorities. Infringing crypto entities may be liable for fines as high as $350,000, and those behind these entities could potentially face a maximum incarceration period of five years.
According to an article in the Cyprus Mail, this proposal to enhance penalties for non-compliant crypto entities was included in a legal amendment submitted by the Finance Ministry to the Parliamentary Committee on Legal Affairs. This submitted draft proposes an amendment to Cyprus’ Prevention and Suppression of Money Laundering Law.
The proposed amendment not only aims to align Cyprus’ legal framework with the stringent standards established by the FATF but also with the recommendations provided by the Council of Europe’s Committee of Experts on Money Laundering and Terrorist Financing (MONEYVAL) report.
For crypto enterprises operating in Cyprus, compliance with these proposed measures will necessitate registration with the Cyprus Securities and Exchange Commission (CSEC). This requirement extends to enterprises already licensed by other European Union (EU) member states and those awaiting licensure.
In preparation for the draft submission, the Finance Ministry sought the opinion of the Cyprus Bar Association. While the association recommended the inclusion of FATF’s travel rule in the legislation, it expressed reservations regarding a mandate that would require crypto entities already registered elsewhere in the EU to additionally register in Cyprus.
Concurrently, the CSEC is exploring the possibility of issuing guidelines to bolster its oversight of the crypto sector.
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Frequently Asked Questions (FAQs) about Cyprus Crypto Regulations
What are the proposed penalties for unregistered crypto firms in Cyprus?
Crypto firms operating in Cyprus without registration may face fines of up to $350,000, and individuals behind such firms could be sentenced to a maximum of five years in jail.
Why is Cyprus proposing these penalties?
Cyprus aims to align its laws with international standards set by the Financial Action Task Force (FATF) and the recommendations of the Council of Europe’s Committee of Experts on Money Laundering and Terrorist Financing (MONEYVAL) report.
What steps must crypto entities take to avoid penalties?
Crypto entities in Cyprus must register with the Cyprus Securities and Exchange Commission (CSEC), including those already licensed by other EU states.
What was the opinion of the Cyprus Bar Association on these proposals?
The Cyprus Bar Association recommended incorporating FATF’s travel rule but expressed reservations about requiring crypto entities registered elsewhere in the EU to additionally register in Cyprus.
Is there any effort to enhance oversight of the crypto sector?
Yes, the CSEC is considering issuing guidelines to strengthen its oversight of the crypto sector.
More about Cyprus Crypto Regulations
- Cyprus Mail Article: Source of the report on proposed penalties for unregistered crypto firms in Cyprus.
- Financial Action Task Force (FATF): The international organization setting standards for anti-money laundering and counter-terrorist financing.
- Council of Europe’s Committee of Experts on Money Laundering and Terrorist Financing (MONEYVAL): Provides information on the recommendations influencing Cyprus’ proposed regulations.
- Cyprus Securities and Exchange Commission (CSEC): The regulatory body in Cyprus responsible for overseeing the financial sector, including crypto entities.