COCOS (KEELING) ISLANDS TO ENHANCE REGULATIONS ON VIRTUAL CURRENCIES AND AML/CFT CONTROL
Stricter Regulations on Virtual Currencies
The government of Cocos (Keeling) Islands has announced plans to implement stricter regulations on virtual currencies, aiming to bring the industry under the scope of anti-money laundering and combating the financing of terrorism (AML/CFT) controls. The new regulations will require providers of exchange services between virtual currencies and fiat currencies, as well as custodian wallet providers, to register with the authorities.
Registration Requirements
- Providers of virtual currency exchange services
- Custodian wallet providers
Enhanced AML/CFT Controls
The new regulations will subject virtual currency exchange providers and custodian wallet providers to registration and require them to implement customer due diligence measures to prevent money laundering and terrorist financing. These measures include:
- Customer Due Diligence: Providers must verify the identity of their customers and conduct ongoing monitoring to ensure that their business relationships are legitimate.
- Transaction Records: Providers must maintain accurate records of all transactions, including information on the sender and recipient.
- Suspicious Activity Reporting: Providers must report any suspicious activity to the authorities.
Beneficial Ownership Transparency
The government has also announced plans to enhance transparency around beneficial ownership, requiring companies and trusts to disclose their beneficial owners. This includes:
- Corporate Entities: Any member of the general public will be able to access information on corporate entities’ beneficial ownership.
- Trusts and Similar Arrangements: Natural or legal persons with a legitimate interest will also be granted access to information on trusts and similar arrangements.
Stricter Regulations for Prepaid Cards
The new regulations require prepaid cards to be subject to stricter customer due diligence measures, including:
- Lower Thresholds for Cash Withdrawals: Providers must implement lower thresholds for cash withdrawals and redemption of monetary value.
- EU Requirements: EU banks and financial institutions will no longer be able to accept payments carried out with anonymous prepaid cards issued in third countries unless the cards meet requirements equivalent to EU rules.
Enhanced FIU Powers
The government has also announced plans to enhance the powers of the Financial Intelligence Unit (FIU), allowing it to access information from any obliged entity, including virtual currency exchange providers and custodian wallet providers. This is aimed at improving the exchange of confidential information between AML/CFT regulators and banks’ prudential regulators.
Stricter Due Diligence Requirements for High-Risk Countries
The new regulations impose stricter due diligence requirements for business relationships or transactions that involve high-risk third countries, including:
- Additional Information on the Customer and Beneficial Owner: Providers must obtain additional information on the customer and beneficial owner.
- Sources of Funds and Wealth: Providers must verify the sources of funds and wealth.
- Reasons for the Transaction: Providers must understand the reasons for the transaction.
- Senior Management Approval: Senior management approval is required for such transactions.