On 19 November 2020 an updated version of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2020 was published (the "Bill").
The Bill will, amongst other things, implement the virtual assets aspects of the Fifth Anti-Money Laundering Directive ("5AMLD"). Recent amendments to the Bill give us the first real flavour of what the Irish AML/CFT regime for virtual assets will look like.
In fact, the Bill goes further than the 5AMLD requirements. Key points include:
1. Virtual Asset Service Providers ("VASPs") to be 'designated persons': AML/CFT requirements will apply to a range of VASPs businesses for the first time.
2. Broader group of VASPs: While under 5AMLD Ireland is required to ensure custodian wallet providers and crypto-to-fiat (or vice versa) exchange services are brought within scope, VASP activities under the Bill will also include:
(a) exchange between one or more forms of virtual assets ('crypto-to-crypto');
(b) transfers of virtual assets; and
(c) participation in, and provision of, financial services related to an issuer’s offer or sale of a virtual asset.
3. Registration: VASPs will be required to register with the Central Bank of Ireland. The registration process will be governed by a detailed new Chapter in the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 and will effectively provide the Central Bank with a gatekeeper role. This will be similar to the 'Schedule 2' registration regime, but looks to be more onerous.
4. Fit and proper: VASPs, their principal officers and beneficial owners will need to be fit and proper.
5. Beneficial owners: There is a focus on beneficial owners of VASPs, including a requirement that an acquisition of a beneficial interest in a registered VASP will require the prior approval of the Central Bank.
The Amended Bill takes its lead from the FATF Recommendations and adopts the FATF term of "virtual asset" and the associated definition, rather than the 5AMLD's use of "virtual currency".
Further changes are likely before this becomes law. 5AMLD implementation is already overdue and there is now some momentum, so we expect the Bill to become law by the end of 2020 / early 2021.
For a more in-depth analysis of these recent changes to the Bill, please read our advisory, here.
For an overview of the Bill as initiated, covering aspects beyond virtual assets, please see our September 2020 advisory.