Compliance by Coinhouse with the LCB-FT Directive (Fight Against Money Laundering and the Financing of Terrorism)
“Ordonnance” (ordinance) no. 2016-1635 of the 1st December 2016 (“Ordinance to strengthen France’s legal framework relating to the fight against money laundering and the financing of terrorism”, Article 2 OJ of 2nd December 2016, text no. 14; JCP E 2016, act. 989) modified Article L.561-2 of France’s Monetary and Financial Code, which now requires “all persons who, as part of their usual work, act as a counterparty or an intermediary for the purpose of acquiring or selling any digital instruments incorporating non-monetary units of value that can be held or transferred for acquiring goods or services, but do not represent a claim on the issuer” to comply with obligations contained in the regulation concerning the fight against money laundering and the financing of terrorism.
When acting as a counterparty in a transaction involving the acquisition or selling of crypto-assets, the company Coinhouse is subject to the obligations contained in the Directive on the Fight Against Money Laundering and the Financing of Terrorism (hereinafter, “LCB-FT”).
The work carried out by Coinhouse involves a series or risks, which are managed by a team of five individuals. This team is made up of an individual who works in the area of fraud prevention, another who works on legal matters, another who is responsible for the Know Your Customer process (hereinafter, “KYC”) and a Compliance and Risk Manager who supervises the entire department.
Risk Prevention / Management
Trading products and goods, regardless of whether they are tangible or virtual, such as crypto-assets, involves significant risk. The risks detailed below do not represent all those involved in holding and selling crypto-assets or other financial transactions involving crypto-assets. Indeed, it would be impossible to list all such risks. These risks include, but are not limited to, the following:
- Market risks: the crypto-assets market is still new and uncertain. You must be aware that there is a chance you will lose all the funds you may have invested. Bear in mind the fact that the value of crypto-assets fluctuates unpredictably. This uncertainty affects both long-standing investors and newcomers to the market.
- Liquidity risks: the crypto-assets market varies in terms of the degree of liquidity. Some crypto-assets are more liquid than others. Less developed markets may amplify the degree of liquidity. Moreover, these marketplaces may suddenly disappear. Coinhouse makes no representations or warranties regarding crypto-assets which are currently available or become available at any point in the future at its physical store, “Coinhouse Paris Store”, or on its website, www.coinhouse.com. All crypto-assets offered by Coinhouse may be delisted at any time without prior notice or consent.
- Legal risks: the legal status of certain crypto-assets may not be established in your jurisdiction. This means that the legality of possessing or exchanging crypto-assets may be unclear. Individuals who use services provided by Coinhouse are responsible for being aware of and understanding legal provisions regarding crypto-assets applicable in their jurisdiction.
- Risks involved in storing crypto-assets: possessing crypto-assets and storing them using third-party services involves certain risks. These risks include security breaches, contractual breaches and your data being lost. When deciding to use such services, the necessary precautions must be taken.
- Risks involving volatility: in addition to liquidity-related risks, the value of all crypto-assets may change quickly. Investors are advised to pay attention to their positioning in the various crypto-assets markets and how they could potentially be affected by a sudden and unpredictable change which would have an impact on their transactions and activity in the market.
- Default risk: when you finance, buy or sell crypto-assets in pairs, you expose yourself to the risk of losing your entire investment. Likewise, when you agree to pay an entry fee as part of a commercial contract, you accept the risk that you may not be able to pay back any loans taken out (in the event of the value of the crypto-asset you have invested in plummeting). Participants must be aware of provisions regarding financing, strategies and risk factors for contracts they enter into, as well as how the latter may affect their ability to invest and pay back any loans taken out.
- Tax risks: The tax status of certain crypto-assets may not be established in your jurisdiction. This means there may be uncertainty regarding your obligation to declare holdings, purchases or sales of crypto-assets to the tax authorities you fall under. Individuals who use services provided by Coinhouse are responsible for being aware of and understanding all tax legislation and regulations regarding crypto-assets applicable in their jurisdiction.
Measures in place at Coinhouse
Internal measures in place at Coinhouse are compatible with applicable European standards in the area of the fight against money laundering and the financing of terrorism. This includes internal monitoring measures designed to contain risks associated with Coinhouse’s line of business.
The following measures represent the minimum guarantees provided by Coinhouse’s LCB-FT framework:
- The introduction and implementation of Know Your Customer (KYC) practices.
- Practices for carrying out additional due diligence on certain customers who represent a higher risk, such as politically exposed persons (PEP).
- Submitting a suspicious transaction report to the French Financial Intelligence Unit.
If you would like to find out more about how we manage risks at Coinhouse, please get in touch with our Compliance Department at the address below:
Coinhouse will reply to your letter or email as quickly as possible and always within a maximum of two months.