Report: Cyprus Mulls Imposing Hefty Fines on Unregistered Crypto Service Providers

Crypto firms that operate in Cyprus without registration may soon be fined as much as $350,000 while individuals behind such firms could face up to five years in jail. The Finance Ministry says its proposals, which are included in a draft recently submitted to parliament, seek to align the country’s laws with the standards set by the Financial Action Task Force.

Draft Sent to Parliamentary Committee on Legal Affairs

Authorities in Cyprus are reportedly planning to impose heavy penalties on crypto firms that fail to register with relevant bodies. Offending crypto entities will pay fines that rise to as much as $350,000 while individuals behind such entities face a maximum jail term of five years.

According to a report in the Cyprus Mail, the proposal to impose stiffer penalties on offending crypto entities was included in a proposed legal amendment recently submitted by the country’s Finance Ministry to the Parliamentary Committee on Legal Affairs. The submitted draft reportedly proposes an amendment to Cyprus’ Prevention and Suppression of Money Laundering Law.

As per the report, the proposed amendment not only seeks to align the country’s laws with the standards set by the Financial Action Task Force (FATF) but also with recommendations of the Council of Europe’s Committee of Experts on Money Laundering and Terrorist Financing (MONEYVAL) report.

Some of the steps that crypto entities operating in Cyprus must take to avoid getting penalized include registering with Cyprus Securities and Exchange Commission (CSEC). Registration with Cypriot bodies will also apply to those already licensed by other Europe Union (EU) states and those not yet licensed.

Meanwhile, before submitting the draft, the Finance Ministry reportedly sought the opinion of the Cyprus Bar Association. While it recommended the incorporation of the FATF’s travel rule into the law, the association still expressed its reservations about a requirement which would compel crypto entities to still register in Cyprus despite being registered elsewhere in the EU.

The CSEC, on the other hand, is currently looking at the possibility of issuing guidelines which would bolster its oversight of the crypto sector.

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