Compliance update for Virtual Asset Service Providers in Luxembourg: Is your crypto business compliant with the update?

On 15 January 2020, the CSSF (Commission de Surveillance du Secteur Financier) in Luxembourg released a communiqué on virtual assets, virtual asset service providers (“VASPs”) and the related registration process.

What is new?

With the adoption of the Laws of 25 March 2020 (the “March 2020 Laws”) amending the AML/CFT Law: 

  • the CSSF becomes the AML/CFT supervisory authority for VASPs, with the role limited to registration, supervision and enforcement for AML/CFT purposes only;
  • VASPs fall under the scope of the AML/CFT Law and have to comply with the related professional obligations, and a new framework is introduced for AML/CFT supervision of VASPs.

Who is concerned? 

If your entity is established or provide services in Luxembourg, you should register with the CSSF in case you are providing at least one of the following services on behalf of your clients or for your own accounts:

  • exchange between virtual assets and fiat currencies, including the exchange between cryptocurrencies and fiat;
  • exchange between one or more forms of virtual assets;
  • virtual assets transfer;
  • custodian wallet services, and any safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets;
  • participation in and provision of financial services related to an issuer’s offer and/or sale of virtual assets.

What should you do to comply with the new framework? 

If your company already offers any of the services described above as of 30 March 2020, you must:

  • notify the CSSF by email immediately (to ipig@cssf.lu);
  • submit as soon as possible a registration file to the CSSF in order to be specifically registered as VASP at the latest for 30 May 2020;
  • comply with the professional obligations and the conditions described in the AML/CFT Law, as amended by the “March 2020 Laws”, as from 30 March 2020.

If your company offers or intends to offer any of the virtual asset services described above, you must:

  • register beforehand as a VASP; 
  • comply with the professional obligations and the conditions.

The registration is subject to the condition that the persons exercising management functions and the beneficial owners should submit evidence to prove their professional repute, which is assessed on the basis of police records and any other elements demonstrating their good repute and guaranteeing their impeccable conduct. At least two people must be in charge of management and must be empowered to effectively determine the direction of the business with adequate professional experience.

How to proceed with the registration? 

The registration file for VASPs is available here: http://www.cssf.lu/en/supervision/fintechvirtual-assets/

The registrations must be submitted to the CSSF in electronic form via the MFT (Managed File Transfer) system of the CSSF, for which the applicant can write at: ipig@cssf.lu to require the link.

How can Scorechain help? 

Based in Luxembourg since 2015, Scorechain helps crypto businesses worldwide to fulfil their compliance requirements. Scorechain Risk AML software provides transaction screening and risk scoring. By identifying the origin and destination of the cryptocurrencies it allows reports for suspicious activities reporting to authorities and helps you to implement a risk-based approach toward this new class of assets. 

To know more about our products, welcome to contact us: contact@scorechain.com

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References:

Communiqué on virtual assets, virtual asset service provider and the related registration: https://www.cssf.lu/fileadmin/files/Publications/Communiques/Communiques_2020/C_virtual_assets_090420.pdf

Law of 25 March 2020 (only in French): http://www.legilux.lu/eli/etat/leg/loi/2020/03/25/a193/jo