Response to consultation on Regulatory Technical Standards on CCP to strengthen fight against financial crime
Question 1. Do you have any comments on the recitals?
We recommend amending the proposed recitals to:
- Enable a CASP to appoint, by default, virtual CCPs, such as email addresses or phone numbers, unless the CASP elects to appoint a physical CCP or the relevant NCA(s) justifies the appointment of a physical CCP by the CASP; and
- Clarify that Member States should take account of the level of ML/TF risk associated with the operation of the CASP in their Member State (rather than all Member States) when determining whether to require CASPs to appoint a CCP.
Default Virtual CCPs
The 5AMLD rightly does not mandate the form of the CCP(s) that a CASP may be required to appoint in host Member States where it has an establishment. Recital 27, AMLR sets out that an establishment in a host Member State may consist of an office managed by an obliged entity’s own staff or an independent person authorised to act for the entity. Furthermore, Recital 27 acknowledges that limited physical equipment is often needed by operators such as CASPs that mainly service their customers through the internet.
Recital 28, AMLR underscores the importance of applying AML/CTF requirements in a proportionate manner, consistent with a risk-based approach, including exempting entities from AML/CFT requirements where the activities they perform present low ML/TF risks and where the activities are limited in nature. The EBA has proposed that it will extend existing CCP provisions to CASPs considering their business model and operation. Furthermore, recital 28, AMLR acknowledges that the nature of crypto-asset services makes the notion of establishment challenging from a practical perspective.
To reflect the virtual/non-physical means by which most CASPs provide services in host Member States, we recommend that the EBA amends the proposed recitals to introduce a default requirement for CCPs to be provided by CASPs through virtual means (e.g., email addresses and phone numbers). A CASP may decide to appoint a physical CCP or be required to appoint a physical CCP if justified by the NCA(s). Permitting a CASP to appoint a virtual CCP may enable it to provide NCAs with a more direct channel to the CASP’s AML/CFT expertise, particularly if this is not located in the host Member State. For instance, a CASP may maintain an office managed by its own staff or an independent person (acting on behalf of the CASP) in a host Member State. This office may be deemed to be an establishment under Recital 27, AMLR but may not contain staff with specific AML/CFT expertise (e.g., if the office has a business development purpose). In such cases, it may be more efficient and effective for the CASP to provide a virtual CCP directly to AML/CFT staff elsewhere.
Member State Risk Assessment
The EBA has proposed that host Member States should be able to require a CASP to appoint a CCP in their Member State where this is commensurate with the level of ML/TF risk associated with the operation of the CASP (draft recital 5). Article 3(4) of the Commission’s existing RTS clarifies that this is providing that the host Member State has reasonable grounds to believe that the operation of an EMI’s and PSP’s establishment presents a high risk of ML and TF.
The EBA should clarify recital 5 to confirm that Member States should assess the level of ML/TF risk posed in their Member State, rather than in all other Member States, to determine whether requiring a CASP to appoint a CCP is commensurate with that risk.
Question 6. Do you have any comments on the amendments proposed in Article 3, paragraph (1) point (b)? Particularly, do you agree with the specific criteria introduced for CASPs in Article 3, paragraph (1) point (b)? If not, please (i) explain why, (ii) provide data or other evidence to support your position, and (iii) describe an alternative drafting proposal.
The EBA proposes that one of the criteria to be met for host Member States to require a CASP to appoint a CCP is a cumulative threshold of EUR3mn for services and activities carried out by a CASP’s establishments. The EBA should clarify that this threshold applies on a Member State by Member State basis and not cumulatively across all Member States. In other words, the threshold should be only considered as one of the criteria for the appointment of the CCP in the Member State where the threshold is exceeded and should not automatically prompt the appointment of CCPs in other Member States.)
Question 15. Do you have any other comments?
We do not have any other comments. We recommend that commensurate amendments are made to other articles in the RTS as necessary to incorporate the proposals we have made in response to question 1 to amend the proposed recitals of the draft RTS.