Cyprus authorities are cracking down on crypto asset service providers (CASPs) that operate without registration with the country’s regulator, the Cyprus Securities and Exchange Commission (CYSEC). The Ministry of Finance has proposed an amendment to the “Prevention and Suppression of Money Laundering Law,” which would impose heavy penalties on unlicensed crypto businesses.
Strict Penalties for Unlicensed Crypto Businesses
According to a local report, unlicensed crypto businesses in Cyprus could face a fine of €350,000 or a maximum prison sentence of five years, or both. This legislative amendment is based on penalties imposed on non-compliant and unlicensed crypto service providers in other European Union (EU) states.
Compliance with International Recommendations
The proposed amendment aligns with recommendations and directives from the Financial Action Task Force (FATF) and MONEYVAL report. These international bodies emphasize the importance of preventing money laundering and illegal activities in the crypto industry. By requiring all crypto asset service providers to register with the CYSEC, the Ministry of Finance aims to protect investors from potential risks.
The Cyprus Bar Association has provided inputs on the scope of the law, including the requirement for crypto service providers registered in other EU states to also register with the Cyprus regulator.
Strict Penalties in Other European Countries
Cyprus is not the only country imposing strict penalties on unlicensed crypto businesses. In Malta, anti-money laundering regulators have fined cryptocurrency platforms Bequant Pro Ltd and Bequant Exchange Ltd nearly half a million Euros and taken other enforcement actions against non-compliant virtual asset service providers. Luxembourg has also imposed fines of up to €5 million for non-licensed crypto businesses, while Belgium has penalties ranging between €400,000 and €800,000. France and Ireland have similarly strict penalties and imprisonment for offenses in the crypto industry.
