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

Authorities in Cyprus are gearing up to enforce stringent penalties on Crypto Asset Service Providers (CASPs) operating without proper registration with the nation’s regulatory body, the Cyprus Securities and Exchange Commission (CYSEC).

This decision to intensify regulations on non-compliant crypto ventures comes in the wake of a legislative amendment proposal submitted by the country’s Ministry of Finance to the “Prevention and Suppression of Money Laundering Law.” The proposal was presented to the Parliamentary Committee on Legal Affairs.

As per local news sources, any crypto businesses found operating without the necessary license in Cyprus could be slapped with a hefty fine of up to €350,000. Alternatively, they could face a jail term of up to five years, or even both consequences combined.

The proposed sanctions placed before the House Finance Committee were formulated in line with penalties enforced on non-compliant crypto service providers in other European Union member states.

In addition, the Ministry of Finance’s amendment is in alignment with the guidance and directions provided by the Financial Action Task Force (FATF) and the MONEYVAL report that was released in November 2022, as indicated in the report.

This suggested change necessitates that all crypto asset service providers undergo registration with CYSEC before they can extend any crypto-centric products or services. Through this initiative, the Finance Ministry is striving to shield investors from potential threats associated with illicit undertakings and money laundering practices.

Moreover, the Cyprus Bar Association has also chimed in, offering insights concerning the breadth of the legislation. Specifically, they have addressed the need for CSPs, even those already registered in other EU nations, to undergo registration with the Cypriot regulatory authority.

Penalties Imposed by EU Member States

Malta’s anti-money laundering authorities have levied fines close to half a million Euros on cryptocurrency entities Bequant Pro Ltd and Bequant Exchange Ltd. This move is part of broader enforcement measures against virtual asset service providers not adhering to compliance standards.

Reports suggest that Malta’s penalties for such breaches can extend to incarceration for a duration of up to six years, accompanied by monetary fines reaching €15 million.

In a similar vein, Luxembourg’s regulatory bodies have imposed fines as high as €5 million on crypto businesses operating without the necessary licenses. Meanwhile, Belgium’s penalty structure for these infractions lies between €400,000 and €800,000. Both France and Ireland have also instituted rigorous financial penalties and jail terms for analogous violations.

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