Cryptocurrency Companies Must Prevent Money Laundering, according to New Spanish Law

The companies will have a six-month period to adapt to the new law. Fines for non-compliance with the law could exceed the amount of EUR 60,000.

The preliminary draft law for the prevention of money laundering recently received the approval of the Spanish authorities. Cryptocurrency service providers from the European country will have to meet new requirements to adapt to it.

Given the new requirements, it is necessary to make a series of changes that law specialists advise in anticipation of the future approval of the preliminary draft law. These changes begin with the creation of a “Money Laundering Prevention Manual” at the internal level, with policies to prevent cryptocurrency companies from becoming involved in this crime.

In recent days, several experts met to discuss the effects and impact of the draft law published on June 12th on the crypto-asset sector. This document transposes the provisions of the Fifth Directive of the European Parliament and modifies the Law on Prevention of Money Laundering in force (Law 10/2010).

Money Laundering specialist, Teresa Ruano; Pinsent Masons Fintech partner, Idoya Arteagabeitia; and Counsel and the firm’s global head of blockchain, Cristina Carrascosa, consider that the companies in the ecosystem must first evaluate their activities and determine to what extent the new law will affect them.

The preliminary draft law establishes that the companies that provide cryptocurrency exchange services (crypto-fiat and crypto-crypto), along with cryptocurrency custody and transfer service providers (including cryptocurrency wallets) are now subject to this new law.

Ruano notes that each company must identify the risks of its activities and determine the legal scope of the products that it offers and launches on the market. For this reason, it will be necessary to create a register of customers, as well as the transactions that they conduct, to establish the possible implications of these activities for money laundering.

Arteagabeitia reminds us that there is still a six-month period for the final approval of the preliminary project. The authorities can take advantage of this period to conduct this evaluation.

Without Community Passport

According to the head of Fintech for Pinsent Masons, the fact of complying with this law does not imply having a license to operate with cryptocurrencies in Spain. She notes that this is a different area.

She states that this adaptation to the draft law will only be valid in Spain and will not function as a community passport in the rest of the countries of the European Union.

Ruano and Arteagabeitia said that each country will transpose the Fifth Directive according to its internal legislation. Therefore, what is valid in one State will not necessarily be valid in another. Arteagabeitia states that a company that operates in several countries at the same time must register in each of them.

Ruano highlights that in Spain there is a wider range of cryptocurrency service providers than those that the Fifth Directive proposes. Besides, she explains that the current precepts already outline what Spanish cryptocurrency companies must do. However, many aspects of the draft law may change once it becomes a law.

In Arteagabeitia’s opinion, complying with this phase of adaptation to the law is essential. The intention is to design mechanisms to keep the register of customers and monitor carefully conducted transactions, to file that report with the authorities when requested. She explained that there will be a fine, which could exceed EUR 60,000, for those companies where someone linked to money laundering manages to enter.

By Alexander Salazar