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Growing List of Countries are Introducing Regulations on Crypto

Richard Marley
September 13, 2021
2 minutes read
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Ukraine’s Parliament officially adopted the Draft Law On Virtual Assets. Prior to this, cryptocurrencies in Ukraine fell into a grey area.

An increasing number of governments are acknowledging the rising demand for cryptocurrencies such as bitcoin. To bring such digital assets into the financial landscape, AML and KYC laws are being imposed to enhance the integrity of the sector.

The latest country that has joined the list is Ukraine, which is seeking to legalize crypto with the introduction of new laws and policies. Last week, El Salvador became the first country to adopt bitcoin as legal tender. Two weeks before that, Cuba passed a law to recognize and regulate cryptocurrencies, quoting “reasons of socio-economic interest.” Panama is also currently in the planning phase for new cryptocurrency regulations.

On Wednesday (8 September 2021), Ukraine’s Parliament officially adopted the Draft Law On Virtual Assets. Prior to this, cryptocurrencies in Ukraine fell into a grey area.

The move has been made in an attempt to legalize cryptocurrency in the country for the first time. The law will come into effect after amendments have been made in Ukraine’s tax code regarding the taxation of cryptocurrency transactions. However, the Ukrainian legislature is yet to vote on these amendments.

The new regulation on cryptocurrencies in Ukraine follow’s President Volodymyr Zelensky signing of the Law On Payment Services – another digital currency-related law. The Payment Services law officially permitted Ukraine’s central bank to issue a CBDC (Central Bank Digital Currency) called the Digital Hryvnia.

Furthermore, the Ukrainian Law on Virtual Assets does not consider crypto as a legal tender in the country, unlike El Salvador. Instead, it mandates that the term ‘financial virtual assets’ be issued by registered entities. Crypto consumers will be able to independently determine the value of virtual assets, open bank accounts to settle transactions, and seek judicial protection for associated rights.

Cryptocurrency service providers are required to abide by the country’s Anti-Money Laundering (AML) regulations and make all necessary attempts to eliminate financing of terrorist activities, just like traditional financial institutions.

Disclaimer: No warranty is herein provided that the information contained in this document is accurate, up-to-date, and/or complete. In no circumstance(s), does such information constitute legal or any other advice. Any person who intends to use, rely, pass-on, or re-publish the information contained herein in any way is solely responsible for the same. We suggest to verify the information and/or obtain expert advice independently if required.

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UK Publishes First National Risk Assessment of Proliferation Financing
The UK is at a high risk of proliferation financing for Korea and Iran, while UK financial institutions remain the main target.

The UK has published its first national risk assessment (NRA) of proliferation financing risks, following the collection of views and evidence from the government, private sector, and academic and research partners, highlighting the proliferation financing risks facing the UK.

The UK is one of the first jurisdictions to carry out such an assessment.

While the UK currently has robust practices in place for combating proliferation financing activities, malign actors involved in proliferation financing seek to exploit the UK’s stability in the global economy and international financial system. The act involves the use of funds for facilitating chemical, biological, radiological, and nuclear (CBRN) programmes which pose a threat to the UK’s national security objectives and threaten international peace.

The key findings of the proliferation financing NRA have been identified as the following:

The UK’s financial sector is at high risk from proliferation actors. The UK’s financial services industry, particularly the banking and insurance sectors, is especially at risk

The Democratic People’s Republic of Korea (DPRK) and Iran are the most significant proliferation financing actors at the state level

The private sector has limited awareness regarding proliferation financing compared to other risks, such as money laundering and terrorist financing

The notice issued by the UK government states that “a lack of awareness of proliferation financing in parts of the UK economy can lead to a lack of understanding of how certain industrial products, for example, may be manipulated for hostile use or for use in a CBRN programme”.

Despite the above-mentioned threats, the NRA highlights the robust counter-proliferation legal framework in place in the UK that protects the country from proliferation financing.

The UK’s autonomous financial sanctions regimes targeting CBRN proliferation, as well as other regulations in the UK, including UN sanctions regimes, export control regimes, and other tools available to the UK Government, limit opportunities for proliferating actors to exploit the UK to obtain financing for CBRN capabilities.

The full assessment can be viewed here.

Suggested Read: FATF Issues New Guidance on Mitigating Proliferation Financing Risk

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Every region across the globe has a specific set of rules and regulations for businesses, and effective compliance with these regulations makes it easier to combat criminals. Here are some regulations from different corners of the world that must be considered while onboarding an intermediary, supplier or shareholder.

FATF’s Recommendations

As per the Recommendation 24 of the Financial Action Task Force (FATF), countries must undertake necessary Know Your Business measures to prevent the misuse of legal persons in money laundering and terror financing. Timely information about the ultimate beneficial owners (UBOs) must be obtained and reported to the relevant regulatory authority of the country. To meet all the FATF’s requirements, businesses can opt for one or more of the following mechanisms for UBO verification:

Acquire registries of the company to get updated information on the beneficial ownership of the company (the Registry Approach)

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Employing existing information (the Existing Information Approach), including:

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6AMLD in the EU

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Conducting ongoing monitoring of the corporate entity and maintaining updated risk profiles of the business entities is important

Transactions must be regularly scrutinized throughout the business relationship to make sure transactions are consistently conducted

Transaction monitoring must also verify the source of funds and the region they are being transferred to/from

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Corporate Transparency Act in the US

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Who owns 25% or more equity shares in the company

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Henceforth, verifying all these entities is important for the company. The Act categorises FATF’s recommendations regarding beneficial ownership for legal persons and as per the Act, the following information about UBOs must be reported to FinCEN:

Date of birth of the owner

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Recommended: Corporate Transparency Act – The Road to Better AML Compliance

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FinCrime through shell companies and imposters has been a problem for the corporate sector for years. Money launderers that pretend to be potential investors and shell companies approaching with fascinating partnership opportunities has become the oldest trick in the book. Unfortunately, many companies still fall prey to these activities, resulting in hefty financial losses, exposure of confidential data, and a damaged brand reputation. With numerous laws in place to combat money laundering and terror financing, there must be an adequate solution in place for screening every entity before developing any business relationships. Shufti Pro’s AI-backed business verification is what every firm needs at the moment. It will not only help you screen partners and intermediaries, but also assist you in staying compliant with the rigid KYB regulations.

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Growing List of Countries are Introducing Regulations on Crypto

Regulatory Approach to Merchant Onboarding

FATF’s Recommendations

6AMLD in the EU

Corporate Transparency Act in the US

How Shufti Pro is Helping Businesses Onboard Legitimate Merchants

In a Nutshell…

Let’s prove your

customer’s identity

with Shuftipro.

Let’s prove your customer’s

identity with Shuftipro.

Growing List of Countries are Introducing Regulations on Crypto

What is Merchant Verification?

Regulatory Approach to Merchant Onboarding

FATF’s Recommendations

6AMLD in the EU

Corporate Transparency Act in the US

How Shufti Pro is Helping Businesses Onboard Legitimate Merchants

In a Nutshell…

Let’s prove your

customer’s identity

with Shuftipro.

Let’s prove your customer’s

identity with Shuftipro.