New Penalties Proposed for Unregistered Crypto Firms in Cyprus
Crypto firms that operate in Cyprus without proper registration may soon face hefty fines and jail time, according to a draft proposal submitted by the Finance Ministry. The aim of these proposed penalties is to align the country’s laws with the standards set by the Financial Action Task Force (FATF).
Draft Sent to Parliamentary Committee on Legal Affairs
A recent report in the Cyprus Mail reveals that the Finance Ministry has submitted a draft proposal to the Parliamentary Committee on Legal Affairs. This proposal suggests imposing stricter penalties on unregistered crypto entities. Offending firms could be fined up to $350,000, while individuals behind these entities may face a maximum prison sentence of five years.
The proposed amendment seeks to align Cyprus’ laws not only with FATF standards but also with the recommendations of the Council of Europe’s Committee of Experts on Money Laundering and Terrorist Financing (MONEYVAL) report.
Steps for Compliance
To avoid penalties, crypto entities operating in Cyprus must register with the Cyprus Securities and Exchange Commission (CSEC). This requirement applies to both firms already licensed by other European Union (EU) states and those that are not yet licensed. Compliance with Cypriot bodies is necessary, even if a firm is registered elsewhere in the EU.
Cyprus Bar Association Opinion
The Finance Ministry sought the opinion of the Cyprus Bar Association before submitting the draft proposal. While the association recommended incorporating FATF’s travel rule into the law, it expressed concerns about requiring crypto entities registered elsewhere in the EU to also register in Cyprus.
Enhanced Oversight by CSEC
The CSEC is currently considering issuing guidelines to strengthen its oversight of the crypto sector in Cyprus.
Hot Take: Stricter Regulations to Safeguard the Crypto Industry in Cyprus
Cyprus is taking steps to ensure that its crypto industry operates within established legal frameworks and complies with international standards. By imposing heavier penalties on unregistered crypto firms, the government aims to protect against money laundering and terrorist financing. While there are concerns about duplicative registration requirements for EU-registered entities, aligning with FATF and MONEYVAL recommendations will enhance the country’s reputation in the global crypto market. The CSEC’s efforts to strengthen oversight further demonstrate Cyprus’ commitment to creating a secure and transparent environment for crypto businesses.
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