Updated 07 May, 2021

Ireland Requires Crypto Firms to Comply with AML Regulations

Ireland Requires Crypto Firms to Comply with AML Regulations

Key Takeaways:

  • Ireland implements the 5AMLD, governing cryptocurrency operations
  • Crypto firms in Ireland must comply with the rules within three-months

Irish Law Cracks Down On Crypto Firms

Crypto firms registered in Ireland are now subject to regulatory oversight. They must comply with anti-money laundering rules set by the European Union. Near the end of last month, the EU’s Fifth Anti-Money Laundering Directive, 5AMLD, was transposed into Irish law.  The 2021 Criminal Justice Money Laundering and Terrorist Financing Amendment Act now came into effect.

The law requires all crypto firms in Ireland to register with the central bank of Ireland within a three-month period. If a crypto company does not comply with the new regulation, it will be considered a “criminal offence” and could result in a “fine, imprisonment or both.”

The Irish central bank has defined the new rules to apply to the so-called virtual asset services providers, or VASPs. If it provides exchange between a cryptocurrency and fiat currency,  between two cryptocurrencies and transfer of virtual assets a crypto company is considered a VASP. It is also a VASP if there’s an exchange between custodian and other financial services. The services must be related to an “issuer’s offer or sale of virtual assets”.

What Changes Are Set To Take Place?

Under the new rules, crypto sellers are required to collect know-your-customer (KYC) data. They need to comply with anti-money laundering (AML). Similar to banks, they also need to comply with counter-terrorism financing (CTF) requirement.  On the other end, the oversight means it’s no longer possible for market participants to trade cryptocurrencies anonymously in Ireland. They will need to present identification, origin of funds and proof of transactions.

Central banks and regulators around Europe have been on edge to come up with a way to counteract illicit crypto trading activity and to introduce a regulatory framework that would guarantee investor protection. This is the reason why countries like the Netherlands, France and the UK have already seen companies either shut down or move offshore because of the new rules.

The EU’s 5AMLD came into force in July 2018 and gave EU members a deadline of January 2020 to adopt the rules. However, European countries are now asked to comply with even stricter crypto regulation under the Sixth AML Directive, 6AMLD. The new regulatory framework details harsher penalties. So it hardens the definitions of criminal activity related to money laundering. The 6AMLD came into effect on Dec 3, 2020 and must be implemented by European financial institutions by Jun 3, 2021.