CySEC Informs Relevant Regulated Entities of NRA on ML/TF Risks of Virtual Assets Activities and Service Providers

The Cyprus Securities and Exchange Commission (CySEC) expects to inform all relevant Regulated Entities on the results of the National Risk Assessment (NRA) on Money Laundering and Terrorist Financing (ML/TF) risks of Virtual Assets (VA) Activities and Virtual Asset Service Providers (VASPs), which was published by the Ministry of Finance of the Republic of Cyprus.

The NRA results are an important source of information, which the Regulated Entities, need to consider when identifying and assessing money laundering and terrorist financing risks.

In the context of compliance with International Financial Action Task Force (FATF) standards, and in particular FATF Recommendation 15, through the collaboration of the Ministry of Finance and the House of Representatives, a specialised Risk Assessment on the introduction of VA and VASPs in the Republic, was commissioned in July 2020, from a specialised US Advisory Firm, Bandman Advisors, with expertise in FinTech & RegTech and Crypto Asset technology.

According to the announcement, the NRA report focuses on the ML/TF risks posed by Virtual Assets and Virtual Asset Service Providers, by identifying and assessing the risks that may arise in relation to the use of these new technologies. Additionally, it includes recommendations and other appropriate measures in order to manage and mitigate those risks, as required by the relevant FATF's Recommendations.

The CySEC considers the NRA Report to be of assistance to the Regulated Entities engaging or seeking to engage in VA activities, in understanding their AML/CFT risks and obligations and how they can effectively comply with these obligations.

In mid-December, Fazzaco reported that CySEC has issued a policy statement​, saying that it would give certain firms permission to operate under the Temporary Permissions Regime (TPR) until their applications are reviewed.