Regulatory Updates on AML and MiCA in 2024

1. Key AML Regulatory Updates in 2024 

All European Union (EU) Member States, including Cyprus, regularly review and transpose European AML Directives into their national legislation, ensuring these are in harmony with their existing legal framework. The forthcoming changes in AML regulation include:

• The new AML/CFT Regulation, which introduces directly applicable rules on customer due diligence and the identification of beneficial ownership.
• The amendment of Regulation 2015/847/EU, which facilitates the tracking of crypto-asset transfers and enforces the adoption of the travel rule.
• The amendment of Directive (EU) 2019/1153, granting national authorities in Member States direct access to the Bank Account Registers Interconnection System (BARIS) to combat serious crime.
• The 6th AML Directive, which repeals AMLD 4 and AMLD 5, further enhancing them by addressing emerging risks and promoting greater transparency.

Following the publication of the AMLA Regulation in the EU Official Journal, on June 19, 2024, the European Commission’s AML package established the new Anti-Money Laundering and Countering the Financing of Terrorism Authority (AMLA). The AMLA will be responsible for overseeing EU AML/CFT supervision and strengthening cooperation among Financial Intelligence Units (FIU) through individual and group-wide assessments and reviews.

2. Introduction to MiCA Regulation 

The Regulation (EU) 2023/1114 of the European Parliament and the Council on Markets in Crypto Assets consists of a dedicated and harmonised framework that provides specific rules for crypto assets and related services. Its aim is to outline uniform requirements regarding crypto assets and the authorisation, operation, organisation and governance of Crypto Asset Service Providers (CASP).

MiCA is applicable to natural and legal persons, and other undertakings engaged with crypto assets.

The Regulation’s main objectives are:

• to provide legal basis for crypto assets not covered by existing EU legislation,
• replace existing national frameworks that apply to crypto assets not covered by existing EU financial services legislation,
• establish specific rules for stablecoins, including them being e-money.

However, MiCA does not apply to other public authorities of EU Member States, the European Investment Bank (EIB), including its subsidiaries, the European Financial Stability Facility and Mechanism and public international organisations.

Contact us at info@salvusfunds.com if you require support with your regulatory compliance obligations or are interested in our Regulatory Updates on AML & MiCA in 2024 course with IforPE.

3. EBA Risk Factors Guidelines

This aims to expand the guidelines’ applicability to include CASP and recognise CASP obligations within the AML/CFT framework to be proportionate to those of credit and financial institutions. This action marks a significant milestone, facilitating broader acceptance of CASP by credit institutions for establishing business relationships. The Guidelines mainly concern:

1. Identifying ML/TF risk factors associated with their customers, geographical areas, products and services and delivery channels.
2. Assessing the ML/TF risk, utilising the collected information and the different weights.
3. Conducting the appropriate Customer Due Diligence (CDD) process to understand better the risks associated with individual business relationships and occasional transactions.
4. CASP specific factors increasing or reducing ML/TF risks.

From our perspective, the EBA’s decision to mandate that CASP operate as obliged entities under the AML/CFT framework, applying the same regulations as those governing credit and financial institutions, combined with MiCA’s enactment, will yield several benefits. This approach will enhance the credibility and reliability of CASP, which is essential for maintaining the integrity of the European crypto-asset market. Additionally, it will improve investor protection while enabling CASP regulated entities to stay competitive on a global scale within the regulatory landscape.

Implementing stringent AML/CFT measures will result in making financial and credit institutions more inclined to establish business partnerships with CASP. It is worth highlighting that CASP registered with the Cyprus Securities and Exchange Commission (CySEC) have been required to meet AML/CFT obligations from the outset.

Final thoughts

In summary, the fast-evolving digital and crypto asset sector requires regulators to establish conditions that ensure both investor protection and economic stability. Achieving these conditions involves the integration of new regulatory frameworks, such as MiCA, with the strengthening of existing measures like the AML/CFT regime. It is crucial for obliged entities to stay informed about regulatory developments and understand the compliance obligations that apply to them.

To achieve this, it is essential for professionals working in entities regulated by CySEC and the Central Bank of Cyprus (CBC), as well as those involved in AML matters across other EU-regulated entities, to stay up to date through specialized training. To support the financial services industry, SALVUS Funds, in collaboration with the Institute for Professional Excellence (IforPE), has developed a self-study course titled “Regulatory Updates on AML & MiCA in 2024″. This course is tailored for key professionals within Cyprus Investment Firms (CIF), CASP, and other entities regulated by CySEC, as well as auditors and lawyers subject to AML legislation. Participants will gain insights into the AML and organisational requirements, the risks applicable to CASP, and the regulatory updates concerning AML and MiCA regulatory frameworks.

Please contact us at info@salvusfunds.com if you require support with your regulatory compliance obligations or are interested in our Regulatory Updates on AML & MiCA in 2024 course with IforPE.

#StayAhead

Should you be interested to read more about AML/CFT compliance related matters or MiCA Regulation, please visit the selected articles below:

• Key AML Regulatory Updates in 2024
• AML Compliance Culture for CySEC Regulated Entities
• MiCA Regulation: Embarking on a new era for Crypto-Assets & CASP

The information provided in this article is for general information purposes only. You should always seek professional advice suitable to your needs.