AML and Travel Rule Obligations for Cyprus CASPs
Authorisation under MiCA does not exist in isolation from anti-money laundering law. Crypto-Asset Service Providers in Cyprus remain subject to the EU’s AML/CFT framework, including obligations that have been specifically extended to crypto-asset transfers.
AML Registration and Ongoing Obligations
CASPs are treated as “obliged entities” for AML purposes, meaning they must carry out customer due diligence, ongoing monitoring of transactions, and reporting of suspicious activity to the relevant Cypriot authorities, in line with the same broad framework that applies to banks and other financial institutions.
The Travel Rule
The EU’s Transfer of Funds Regulation, extended to cover crypto-asset transfers, requires CASPs to collect, verify and transmit information about the originator and beneficiary of a crypto-asset transfer, commonly referred to as the “Travel Rule.” This applies regardless of the transfer amount for transfers between CASPs, a stricter approach than the threshold-based rules that traditionally applied to wire transfers.
Enhanced Scrutiny for Certain Transfers
CASPs must apply enhanced due diligence to transfers involving self-hosted (unhosted) wallets above certain thresholds, and must have systems in place to detect missing or incomplete originator and beneficiary information on incoming transfers.
Building a Compliant AML Framework
In practice, this means CASPs need AML policies specifically adapted to crypto-asset transfers, transaction monitoring tools capable of screening blockchain activity, a designated compliance officer, and staff training that addresses crypto-specific typologies such as mixer usage, chain-hopping and sanctioned wallet addresses.
Enalian advises crypto-asset businesses, investment firms and payment institutions on MiCA authorisation, notification and ongoing compliance in Cyprus. If you are planning a CASP application or reviewing your regulatory status, our team can guide you through the process. Get in touch with our team to discuss your specific circumstances.
This article is provided for general informational purposes only and does not constitute legal, tax or regulatory advice. Regulatory requirements are subject to change; readers should seek specific advice on their circumstances before taking action.
