Virtual Asset & Virtual Asset Service Providers | National Risk Assessment
The Ministry of Finance of the Republic of Cyprus recently published the National Risk Assessment (the ‘NRA’) on Money Laundering and Terrorist Financing (‘ML/TF’) risks of Virtual Assets (‘VA’) activities and Virtual Asset Service Providers (‘VASPs’) (available here).
The Cyprus Securities and Exchange Commission (CySEC) recently published the Circular C478 to inform the Regulated Entities on the results of the National Risk Assessment (the ‘NRA’) which all Regulated Entities should take into consideration when assessing AML/CFT risks; the NRA provides information to the Regulated Entities to carry out their own risk assessment of ML/TF risks in relation to VA activities in compliance with AML/CFT Law. The results of the NRA consist to be an important source of information for the Regulated Entities in identifying and assessing money laundering and terrorist financing risks.
The Regulated Entities should also consider the ‘Joint Guidelines under Articles 17 and 18(4) of Directive (EU) 2015/849 on simplified and enhanced customer due diligence and the factors credit and financial institutions should consider when assessing the money laundering and terrorist financing risk associated with individual business relationships and occasional transactions’ (‘Risk Factors Guidelines’) which inter alia provide that the Regulated Entities when identifying ML/TF risks associated with a business relationship or occasional transaction, should consider relevant risk factors including who the customer is, the countries/geographical areas the customer operates in, the products, services and transactions the customer requires etc.
According to the said Guidelines, ‘firms should always consider the following sources of information:
- the European Commission’s supranational risk assessment;
- information from government, such as the government’s national risk assessments, policy statements and alerts, and explanatory memorandums to relevant legislation.
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