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Crypto-assets, under the spotlight


Diego Cabezuela Sancho, international president of the World Compliance Association and managing partner of Círculo Legal, offers to Legal Dealmaker’s readership this interesting article about the cryptocurrency market and lays down the keys related to its Compliance hot matters

Diego Cabezuela, international president of the WCA
Diego Cabezuela, international president of the WCA

According to data managed by Europol, money laundering carried out through the use of cryptocurrencies rose by 30 % in 2021. Moreover, some estimates indicate that the total market capitalization of the cryptocurrency market reached an all-time high in November 2021, at € 2.6 billion. The latter figure is probably somewhat speculative, but the numbers nevertheless give an idea of the scale of the difficulty of controlling this new –indeed, not so new– economy.                 

            Although, as a general rule, regulations issued to respond to new challenges are always lagging behind events, the international explosion of the prevention and repression of money laundering is one of the most singular regulatory phenomena of the last decades. Since 1991, the EU has adopted five successive Directives (1991, 2001, 2005, 2015, and 2018) which have progressively tightened the instruments for combating money laundering, facing its new modalities and increasing the categories of persons obliged to exercise the control.

            Compliance programs and anti-money laundering codes have had to do their utmost to keep up with events and protect their organizations from the serious risks of using or being used in movements of funds that could constitute money laundering.

            The same can be said of the formidable expansion of the criminal treatment of money laundering crime, driven by the FATF recommendations and international awareness of the serious damage it poses to financial stability and the reputation of States. In Spain, from considering money laundering only the acts of introduction into legitimate financial circuits of goods or funds from drug trafficking –a particularly despicable offence for the legislator– to its extension to anything deriving from any criminal activity. A worldwide crescendo, orchestrated and unanimous, in the criminal repression of money laundering which, in a short time, has turned it into a mastodontic offense with outlines that are very difficult to delimit, and which obliges compliance officers — in fact, obliges us all– to remain permanently on guard, in the face of the unstoppable growth of this sort of Big Brother of money that we have turned our system into.

            In such a context of permanent and total scrutiny of economic movements, it was clear that the appearance, in 2009, of the first crypto-assets, unregulated and with the enormous potential for anonymity that they provided, was a real dream for those seeking to escape this control, which could not leave European or national legislators indifferent for a long time.

            Thus, in 2018, the EU, concerned about this disturbing area of opacity, published its Fifth Directive 2018/843 of the European Parliament and of the Council of 30 May, in which it made obliged parties –and therefore, with duties of identification, control, business monitoring, etc, and, where appropriate, reporting to the Financial Authority– providers of services for exchanging virtual currency for fiat currency, and electronic wallets. In Spain, both issuers of crypto-assets and related service providers should be registered in the Bank of Spain, before entering or operating in this market.  

            The legal limbo in which cryptocurrencies had been born was beginning to vanish and all these operations, at least theoretically, are already under the spotlight of anti-money laundering control.    

            On the other hand, the European Union is now finalising the implementation of an ambitious Action Plan against money laundering, in which, as could not be otherwise, the control of crypto-assets occupies an important place. The Plan includes, as a star project, the creation of a European Anti-money Laundering Authority (AMLA), which will be responsible for supervision across the EU and will ensure cooperation between all the Financial Information Authorities of the Member States, in Spain the SEPBLAC. With regard to crypto-assets, the Plan contains the so-called MiCA (Markets in Crypto-Assets) proposal, a legal framework aimed at providing legal certainty for transactions with crypto-assets and protecting those who acquire them. In reality, these years of youth and lack of regulation of crypto-assets have, unfortunately, served not only to open up a wide highway for money laundering but also to defraud many buyers and investors, who have fallen victim to pyramid schemes and other forms of deceit that have been taking place with too much impunity on the INTERNET, taking advantage of many operators’ limited knowledge of this complex market.

            New rules for new times.