- Ireland transposed the 5AMLD to national law.
- It extends the Criminal Justice (Money Laundering and Terrorist Financing) Act, 2010 to VASPS.
- The law will impose AML/CFT standards on VASPs starting April 2021.
In September 2020, the Irish government approved the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 20201 that would transpose the 5th Anti Money Laundering Directive (5AMLD) into national law. The bill has been signed into law (Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 20212) on March 18, 20213, and should come into force this month according to the Central Bank of Ireland4. This transposition widens the scope of the law to include Virtual Asset Service Providers (VASPs). The Central Bank of Ireland will be the competent authority in charge of supervising VASPs in terms of AML/CFT.
Who is concerned?
The law includes several new types of crypto-related services in its scope. VASPs conducting the following operations will be subject to the law:
- “exchange between virtual assets and fiat currencies;
- exchange between one or more forms of virtual assets;
- transfer of virtual assets, that is to say, to conduct a transaction on behalf of another person that moves a virtual asset from one virtual asset address or account to another;
- custodian wallet provider; and
- participation in, and provision of, financial services related to an issuer’s offer or sale of a virtual asset or both.”
The law also sets new AML/CFT requirements on Irish companies offering Virtual Assets (VAs) services.
Registration with the Central Bank
VASPs must register with the Central Bank for AML/CFT purposes. Providing VA services without being registered beforehand will be considered a criminal offense.
For the Central Bank to approve the application, VASPs must:
- Prove that their AML/CFT policies and processes are effective; and
- Have “fit and proper” management and owners.
Several documents must be submitted to the Central Bank for registration (along with the application form). Those documents include:
- a copy of AML/CFT policies and procedures;
- a copy of ML/TF risk assessment;
- details of all direct and indirect ownership and management in the firm;
- individual questionnaires to assess the fitness and probity of all individuals who are proposed to hold pre approved control functions (PCFs) in the firm;
- a business plan setting out the firm’s proposed activities, transaction flows, projections, and any outsourcing arrangements envisaged;
- details of the firm’s proposed organizational structure, AML/CFT reporting lines, and staffing arrangements; and
- details of the firm’s AML/CFT training plan.
A sample of the registration form is available on the Central Bank website. Further information on the application process and the needed documents will be published once the law is enacted. VASP will have to submit their application to VASP@centralbank.ie.
VASPs will be obliged to follow several AML/CFT requirements from the Criminal Justice Act 20105 (Part 4). Not complying with these obligations will be a criminal offense and could result in penalties.
VASPs will be required to:
- Conduct an ML/TF risk assessment of their business;
- Conduct customer due diligence (CDD);
- Monitor customers and transactions;
- File Suspicious Transaction Reports (STRs) in case of ML/TF or suspicion of it;
- Implement AML/CFT policies, procedures, and controls;
- Keep appropriate records; and
- Train staff to AML/CFT.
The Central Bank finally advised Ireland-based firms offering or planning to offer VA services to review and implement AML frameworks to be able to comply with the upcoming requirements. Several documents are available on the Central Bank’s website for VASPs to review.
How Scorechain can help VASPs to comply with AML requirements?
Scorechain Blockchain Analytics platform is a useful tool for crypto monitoring and risk assessment. The solution offers tools that can help VASPs improve their AML policies and processes such as:
- Risk scoring that ranges from 1 (risky) to 100 (safe)
- Risk indicators such as scam, mixing service, darkweb, etc…
- Know-your-addresses (KYA) and know-your-transaction (KYT) reports that can be used for STRs and reporting.
In the last few months, crypto regulations entered into force in several jurisdictions for example in South Korea, Serbia, or The Philippines. Ireland is the latest example of this. It clearly shows that cryptocurrencies are more and more regulated around the globe and that VASPs must comply with new requirements. Scorechain can help you in your compliance journey. Contact us for a free demo: firstname.lastname@example.org
The AML/CFT requirements for VASPs commenced on April 23, 2021.
Scorechain is a Risk-AML software provider for cryptocurrencies and digital assets. As a leader in crypto compliance since 2015, the Luxembourgish company serves worldwide customers in 33 different countries with more than 150 licenses established, ranging from cryptocurrency businesses to financial institutions with crypto trading, custody branch, digital assets customers onboarding, audit and law firms and some LEAs.
Scorechain solution supports Bitcoin analytics with Lightning Network, Ethereum analytics with all ERC20 tokens and stablecoins, Litecoin, Bitcoin Cash, Dash, XRP Ledger and Tezos. The software can de-anonymize the Blockchain data and connect with sanction lists to provide a risk scoring on digital assets transactions, addresses and entities. The risk assessment methodology applied by Scorechain has been verified and can be fully customizable to fit all jurisdictions. 300+ risk-AML scenarios are provided to its customers with a wide range of risk indicators so businesses under the scope of the crypto regulation can report suspicious activity to authorities with enhanced due diligence.