30 December 2024 saw the FIAU issue a pivotal notice to subject persons involved in the crypto industry. This notice relates to a series of significant amendments to the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR). These changes aim to harmonise the local AML/CFT framework with the latest EU legislative developments, particularly within the crypto-assets sector.
In addition, a revised version of the FIAU Implementing Procedures (IPs) – Part II for Crypto-Asset Service Providers (CASPs) was issued, providing for both the above-mentioned amendments to the PMLFTR, as well as the updates made to the European Banking Authority’s ML/FT Risk Factor Guidelines, issued in January of last year.
Additional risk factors were outlined, such as the following:
Revised procedures were also outlined for transactions involving self-hosted addresses and cross-border correspondent relationships with CASPs, who are required to collect identifiable information and maintain records of the addresses used in crypto-asset transactions. Additionally, analytical tools must be utilised to verify the information provided by customers and confirm the type of wallet being used.
Specific guidelines were also provided with respect to Multi-Party Computational Wallets, requiring CASPs to identify and verify each individual holding a key share. Moreover, similar verification measures are applicable with respect to custodial wallets, especially in cases where the custodian is deemed to pose higher risks.
Moreover, Chapters 3 and 4 of the FIAU IPs Part II for CASPs – which pertain to specific AML/CFT practices to be undertaken by VFA issuers and agents – were removed in their entirety.
Addressing these risks helps protect clients’ funds from unauthorised access and fraudulent activities. Robust risk management frameworks also ensure the overall stability and credibility of the crypto-asset sector, building trust amongst users and stakeholders whilst supporting its safe, regulated growth and development.
PwC’s Financial Crime Compliance team can assist you in navigating these regulatory changes through conducting thorough reviews of your AML/CFT framework, as well as potentially carrying out remediation exercises following such reviews. We may also evaluate your risk assessment methodologies and policies and procedures, and ensure they are in line with these regulatory improvements, and also provide training on the same.
