Cyprus to Impose Strict Penalties on Unlicensed Crypto Service Providers – Report

Source: Getty ImagesCyprus authorities would soon impose hefty penalties on crypto asset service providers (CASPs) that are found offering services without registering with the country’s regulator – the Cyprus Securities and Exchange Commission (CYSEC).

Cyprus’s move to clampdown on unlicensed crypto businesses comes after the country’s Ministry of Finance submitted a proposed legislative amendment to the “Prevention and Suppression of Money Laundering Law,” to the Parliamentary Committee on Legal Affairs.

According to a local report, unlicensed crypto businesses in Cyprus would face a hefty penalty of €350,000 or five years in prison or both.

The legislation before the House Finance Committee was drafted based on penalties imposed on non-compliant and unlicensed crypto service providers in other EU states.

Also, the Ministry of Finance’s proposed amendment follows recommendations and directives from the Financial Action Task Force (FATF) and MONEYVAL report published in November 2022, the report added.

The proposed amendment mandates all crypto asset service providers to register with the CYSEC, before offering any crypto-related products and services. By doing so, the Finance Ministry aims to protect investors from the risks of illegal activities and money laundering.

Furthermore, the Cyprus Bar Association has given inputs on the scope of the law, particularly, the requirement for CSPs registered in other EU States to register with the Cyprus regulator.

Penalties Imposed by EU Member States

In Malta, anti-money laundering regulators have fined cryptocurrency platforms Bequant Pro Ltd and Bequant Exchange Ltd nearly half a million Euros and other parallel enforcement actions against non-compliant virtual asset service providers.

The country has imposed imprisonment for up to six years and fines of up to €15 million, per reports.

In Luxemburg, regulators have slapped fines of up to €5 million for non-licensed crypto businesses, and Belgium has imposed penalties ranging between €400,000 and €800,000. France and Ireland also have similar stricter penalties and imprisonment for such offenses.