Crypto – Anti-Money Laundering – You Can Run But You Can’t Hide

A review of recent requirements for Virtual Asset Service Providers

As of 23 April 2021, firms involved in the provision of crypto-asset services will note the commencement of certain sections of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 (the “2021 Act”) which transposed into Irish law the European Union’s Fifth Anti-Money Laundering Directive.

The introduction of the 2021 Act has had the effect of bringing virtual asset service providers (“VASPs”) within its scope and such VASPs will now be required to register with the Central Bank of Ireland (the “Central Bank”) along with having to fulfil its other AML/CFT obligations.  Importantly, firms not established in Ireland and/or not carrying on business as a VASP prior to the 2021 Act coming into force are obligated to register with the Central Bank before carrying out any business relating to virtual assets from Ireland.  VASPs already established in Ireland and carrying on business as a VASP immediately prior to the 2021 Act coming into force will note the transitional provisions included in the 2021 Act and will have 3 months to apply to the Central Bank for registration.

From a practical perspective, VASPs seeking to register with the Central Bank will initially be required to submit a VASP Pre-Registration Information Form to VASP@centralbank.ie in order to obtain an Institution Number.  Subsequently, a VASP will submit an Application Form together with supporting documentation to the Central Bank for review.  Before granting authorisation, the Central Bank must be satisfied that:

  • the VASP’S AML/CFT policies and procedures are effective in combatting the money laundering and terrorist financing (ML/TF) risks associated with its business model; and
  • the VASP’s management and beneficial owners are fit and proper.

According to the Central Bank, it will adopt a robust, structured, and risk-based process that seeks to ensure that only those applicants that demonstrate that they are in a position to comply are registered.  It is important to point out that it is a criminal offence to carry on the business of a VASP having failed to register with the Central Bank.  As per the 2021 Act, a person in contravention is liable (i) on summary conviction to a class A fine or imprisonment up to 1 year or both, or (ii) on conviction on indictment, to a fine not exceeding €500,000 or imprisonment up to 5 years or both.

How we can help?

If you have any queries or concerns, or would like to discuss the above in further detail, please feel free to contact Gregory GannonBanking & Finance (ggannon@bhsm.ie) for further information.

This article is for general information purposes.  Legal advice must be obtained for individual circumstances.  Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.

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