•July 21, 2023

Circular C589: MONEYVAL’s report on money laundering and financing of terrorism risks in the world of virtual assets

On July 18th, 2023, the Cyprus Securities and Exchange Commission (the “CySEC”) issued Circular C589 on MONEYVAL’s report on money laundering and financing of terrorism risks in the world of virtual assets (the “Circular”).

 

Via the issuance of the Circular, CySEC informs the Regulated Entities* that MONEYVAL has published a Report on money laundering and terrorist risks in the world of virtual assets (the “Report”), which presents an overview of the ML/TF risks in the world of virtual assets and their service providers in MONEYVAL members. Moreover, the Report includes, inter alia, the following:

  1. Horizontal analysis of MONEYVAL’s members level of compliance with FATF Recommendation 15,
  2. Overview of the measures taken to regulate and supervise the virtual asset service providers (the “VASP”) sector,
  3. Features of the identified risks that criminals use VASPS and virtual assets (the “VA”) to launder proceeds of crime.

Further to the above, the Report contains an analysis data obtained from MONEYVAL member across multiple issues relating, inter alia, to the following:

  1. how members regulated the activity of issuance of VAs and operation of VASPs,
  2. the types of VA platforms used for financial support of criminal activity,
  3. examples of cases investigated by the relevant authorities with a description of criminal schemes involving the virtual asset elements that have been identified.

CySEC considers the Report to be of assistance to the Regulated Entities engaging or seeking to engage in VA activities, as of understanding their ML/TF risks and how to effectively comply with these obligations. Thus, CySEC expects all Regulated Entities to study the Report and take due account and consideration of its content while assessing their ML/TF risks.

Should you require any further assistance and/or clarification in respect to the abovementioned, please do not hesitate to contact us.

*Regulated Entities:
i. Cyprus Investment Firms (“CIFs”)
ii. Administrative Service Providers (“ASPs”)
iii. UCITS Management Companies (“UCITS MC”)
iv. Self-Managed UCITS (“SM UCITS”)
v. Alternative Investment Fund Managers (“AIFMs”)
vi. Self-Managed Alternative Investment Funds (“SM AIFs”)
vii. Self-Managed Alternative Investment Funds with Limited Number of Persons (“SM AIFLNP”)
viii. Companies with sole purpose the management of AIFLNPs
ix. Small Alternative Investment Fund Managers (“Small AIFMs”)
x. Crypto Asset Service Providers