IMPACT ON OBLIGATED ENTITIES AND THE CRYPTO MARKET

Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) regulation has evolved to meet modern challenges, especially with the emergence of crypto assets. The MiCA Regulation represents a significant milestone in market supervision, expanding obligations and penalties to new entities. This article explores the fundamentals of the regulation, its principles, and how Summons Abogados supports companies in achieving compliance.

Origin and Applicable Regulation: Criminal Perspective

Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) is a crucial element within the international regulatory framework. Since its inception, regulations have been implemented to control the illicit flow of money and ensure that financial activities remain transparent and free from links to criminal activity. This approach has been supported by international bodies such as the Financial Action Task Force (FATF), which sets global standards in this area.

From a criminal perspective, Spanish legislation includes various provisions that severely penalize non-compliance with AML/CFT regulations. The Penal Code, particularly in articles addressing economic and financial crimes, defines money laundering and terrorist financing as criminal offenses, punishing both individuals and entities that fail to fulfill their supervisory and control obligations.

International Bodies and Regulators

The main international bodies responsible for AML/CFT regulation and supervision include:

Financial Action Task Force (FATF): Establishes recommendations that countries should implement in their legal systems.
International Monetary Fund (IMF) and World Bank: These organizations provide technical assistance for implementing regulations in emerging economies.
European Commission and European Parliament: In the EU, these bodies have been instrumental in developing regulations that have modernized the European framework, such as the Fourth and Fifth AML Directives, along with the so-called AML Package, approved on May 31, 2024. This package, aimed at further harmonizing and coordinating the European fight against these crimes, includes the well-known Sixth Directive and an AML/CFT Regulation, as well as the establishment and regulation of the European Anti-Money Laundering Authority (AMLA).

Fundamentals and Structure of the International AML/CFT System

The international AML/CFT system is based on three fundamental pillars:

Prevention: Through risk identification and the implementation of policies aimed at preventing the channeling of illicit funds.
Supervision: Conducted by regulatory bodies that monitor financial activities to detect potential irregularities.
Sanction: Application of criminal and administrative measures for those who fail to meet their obligations in this area.

The structure of the system is founded on international cooperation, as money laundering and terrorist financing crimes often cross borders. Regulations have adapted to new technologies, such as the use of crypto assets, which have opened new avenues for money laundering, driving recent regulatory changes.

Administrative Legislation: Obligated Entities and Sanctions

In Spain, administrative AML/CFT legislation identifies a range of obligated entities required to meet certain control and reporting obligations. These entities include, among others:

Financial and credit institutions.
Legal and accounting professionals, under specific conditions.
Casinos and other gaming entities.
Crypto-asset exchange platforms.

Failure to comply with imposed obligations can result in administrative sanctions and, in some cases, lead to criminal liability. Sanctions include financial penalties and, in certain cases, suspension or revocation of the administrative authorization to operate.

MiCA Regulation and Obligated Entities in the Crypto-Asset Market

One of the most significant regulatory advancements is the Regulation on Markets in Crypto-Assets (MiCA), a pioneering regulation in the European Union aimed at comprehensively regulating markets where crypto-assets are traded. Its objective is to provide a legal framework that protects investors and ensures financial stability, addressing, among other things, risks related to money laundering and terrorist financing.

The MiCA Regulation introduces a series of new obligations for crypto-asset platforms, including:

Transparency Obligations: Requiring platforms to disclose detailed information about their activities and operations.
Licensing and Supervision: Entities offering crypto-asset services must obtain prior authorization from financial authorities and meet minimum capital requirements.
Anti-Money Laundering Measures: Platforms must implement AML/CFT mechanisms, including customer identification and verification (KYC) to prevent the use of crypto-assets in illicit activities.

Origin of MiCA: Evolution of Supervisory Perspective

The origin of MiCA reflects the need for harmonized regulation within the European Union, as divergent approaches previously existed among member states. The rise of crypto-assets and their increasing use within the international financial system compelled regulators to adjust their approach and controls, integrating the supervision of the crypto-asset market into the AML/CFT framework.

Supervisors have shifted their stance, moving from a more permissive but cautious attitude toward crypto-assets to greater intervention to mitigate the risks associated with these assets. This includes collaboration between international organizations and the creation of more robust control, reporting, and information-sharing systems to detect suspicious activities.

Conclusion

AML/CFT regulations are in constant evolution, with the past few decades showcasing this dynamic process. The MiCA Regulation, together with the AML Package, are the most recent examples of how regulators are responding to challenges posed by new technologies and innovations in international and regional financial operations. At Summons Abogados, we provide comprehensive support to companies and professionals seeking to adapt to this evolving regulatory framework, ensuring their activities remain within legal parameters and helping them avoid sanctions and reputational risks. Our experts are prepared to guide you through each step of the compliance process.