Cryptocurrency service providers in Spain – be prepared for AML/CTF compliance

All individuals/entities intending to provide services related to virtual currencies to customers located in Spain, including those doing so from abroad on a cross-border basis, should familiarise themselves with Spanish AML/CFT requirements and apply for registration as soon as possible.

The impact of the EU AMLV regime on crypto

In 2018 the EU issued its 5th anti-money laundering and countering the financing of terrorism (AML/CFT) directive, containing strict new requirements for individuals and entities providing certain services in relation to virtual currencies. As part of these requirements, Member States must now:

1.  Ensure that providers of exchange services between virtual currencies and fiat currencies and custodian wallet providers are registered; and 
2. Conduct ‘fit and proper’ assessments of the providers’ management and beneficial owners.

Impact in Spain

These provisions were implemented in Spain in April 2021. Providers of virtual currency services must be listed on a special register set up and run by the Bank of Spain, starting from 29 January 2022.On 29 October, the Bank of Spain put the necessary information and official forms to apply for registration on its website and started accepting applications.

The following individuals and entities have the obligation to register:

• Individuals/entities of any nationality who offer or provide cryptocurrency services in Spain;
• Individuals who provide these services from a base in Spain or where the services are managed in Spain, regardless of where the customers are located; and
• Legal entities established in Spain which provide these services, regardless of where the customers are located.

According to the Bank of Spain’s website, these individuals and entities have to seek specific registration even if they are already registered for other purposes by the Bank of Spain or other competent authorities (e.g., banks which provide custody services for virtual currencies will also have to apply to register).

Before including an individual/entity in the register, the Bank of Spain will assess whether they:

1. Have internal procedures and bodies which are compliant with Spanish AML/CFT legislation; and 
2. Meet the ‘fit and proper’ requirements established for credit institutions. 

The rules published in April do not specify who must be fit and proper in the case of entities. However, the Bank of Spain’s website states that applicants have to submit a suitability questionnaire for the entity itself and for each of the individuals who effectively manage its activities.

Please get in touch for specific advice with respect to these new requirements.