Following DLT – Amendments to POCA to compliment Token Offerings
The Government of Gibraltar has recently passed regulations which extends the scope of the Proceeds of Crime Act 2015 (“POCA”) to cover certain businesses involved with the sale of digital tokenised assets. The regulations seek to regulate the ever-increasing number of businesses setting up to undertake token sales.
By way of background, Gibraltar introduced the Financial Services (Distributed Ledger Technology Providers) Regulations (the “DLT Regs”) on 1st January. The DLT Regs amended the Financial Services (Investment and Fiduciary Services) Act and has created a licensing regime for businesses that store and/or transmit value belonging to others through the use of the blockchain. The aim of the DLT Regs ultimately being to set Gibraltar up as a crypto-hub. In addition to the DLT Regs, Gibraltar will be introducing regulations in respect of token sales later this year. The practice of token sales has, with the emergence of various alt-coins, also increased as a popular means of businesses raising capital.
On that basis, there was a need for businesses within this sphere to adhere to Gibraltar’s EU standard anti-money laundering and customer due diligence requirements. The amendments to POCA add to the definition of relevant financial business:
“undertakings that receive, whether on their own account or on behalf of another person, proceeds in any form from the sale of tokenised digital assets involving the use of distributed ledger technology or a similar means of recording a digital representation of an asset”
POCA imposes on relevant financial businesses, amongst other requirements, the need to obtain relevant identification documentation on potential clients (with enhanced requirements where a specific individual or transaction is considered high-risk), the keeping of certain records and appropriate procedures to ensure compliance.