Bank of Spain puts in place new register for virtual currency exchange providers and custodian wallet providers

Spain - 10 / 28 / 2021

This register, which was regulated in Spain last April to adapt the Spanish legislation to the 5th Anti-Money Laundering Directive, introduces a whole set of specific requirements to be taken into account by virtual currency exchange providers and custodian wallet providers.

The Bank of Spain recently put in place the new register for virtual currency exchange providers and custodian wallet providers. This register was regulated in additional provision two of Law 10/2010, introduced by Royal Decree-Law 7/2021, of April 27, 2021 on the transposition of EU directives on competition, anti-money laundering, credit institutions, telecommunications, tax measures, environmental damage prevention and remediation, posting of workers in the framework of the transnational provision of services and consumer protection.

Implementing Directive (EU) 2018/843 (the 5th Anti-Money Laundering Directive), the Spanish Anti-Money Laundering Law contains as new cases of obliged entities for the purposes of compliance with the legislation in this respect “providers engaged in exchange services for virtual and fiat currencies and custodian wallet providers”. It needs to be remembered that for the purposes of the AML/CTF legislation, providers engaged in exchange services and custodian wallet providers are classed as financial institutions, so they will not be able to benefit from all the exemptions from the internal control rules that the Regulations for Law 10/2010 allows for non-financial institutions. As a result of this obligation and to ensure proper monitoring of their compliance, the law itself requires the Bank of Spain to put in place a register on which those providers have to be entered.

The specific requirements associated with this register are as follows:

The parties that have to be entered include both providers not under the supervision of a competent authority, along with regulated institutions that provide these services and are already registered on the government registers kept by the competent authority.
The obligation to be registered applies to any providers which:

operate in Spain without an establishment (due to having the control or management of their activities outside Spain or being a legal entity established outside Spain); or
operate outside Spain but are established or domiciled (in the case of companies) in Spain.

The provider concerned must undergo a suitability test in which the Bank of Spain will verify whether it meets the relevant commercial and professional good standing requirements.

Therefore, registration will be necessary where the supply of these services, the establishment or the management of their services are in Spain, no matter where the customers for their services are located.

REGISTRATION PROCESS

Registration must be carried out by the providers in the procedures laid down by the Bank of Spain and using the forms provided by it:

There are specific forms to be completed for each type of service, exchange or custodian wallet: CRIPTO01 (virtual currency exchange activities) or form CRIPTO03 (custodian services).
In both cases form CRIPTO05 has to be completed relating to the statement of commercial and professional good standing.
And together with the forms, they have to submit: a no-criminal-record certificate; identity document; the applicant’s anti-money laundering and counter-terrorist financing manual; and the applicant’s risk self-assessment.
Legal entities can only send the documents electronically to the Bank of Spain whereas individuals have the option of sending them by mail or electronically.

After examining the applicant’s documents, the Bank of Spain will deliver a decision on the application within 3 months from their receipt.

Providing these services without the mandatory registration will be classed a very serious infringement under the Anti-Money Laundering Law, and may be classed serious if the activity was performed simply on an occasional or isolated basis.