Financial Crime World

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Financial Regulation and Governance in Cyprus: A Favourable Framework for Businesses

Cyprus’ legal framework is particularly strong, thanks to mandatory compliance with European Union regulations. The legislation governing Cyprus’ financial services sector underpins the island’s ambition to become a leading international financial centre.

As a former British colony, Cyprus law is based on English Common Law and has been amended in recent years to meet European Union requirements. This strong legal foundation provides foreign businesses with a familiar and reliable framework within which to operate, while remaining fully compliant with the EU, the Financial Action Task Force on Money Laundering (FATF), the Organization for Economic Co-operation and Development (OECD) and the Financial Stability Forum.

Regulatory System

Financial institutions in Cyprus are regulated and supervised by three authorities:

  • The Central Bank of Cyprus, responsible for supervising commercial banks and cooperative credit institutions
  • The Superintendent for Insurance Control, responsible for insurance sector supervision
  • The Cyprus Securities and Exchange Commission, responsible for securities market regulation

However, changes introduced by the EU’s Single Supervisory Mechanism in 2014 saw the transfer of supervision of all eurozone largest banks to the European Central Bank.

Prevention and Suppression of Money Laundering and Terrorist Financing Activities

Cyprus has also put in place all necessary mechanisms for the prevention and suppression of money laundering and terrorist financing activities. Cypriot authorities cooperate with foreign supervisory authorities in compliance with FATF recommendations, ensuring that financial sector legislation and practices are aligned with international standards.

Anti-Money Laundering Law

The national anti-money laundering law is fully aligned with the 4th EU Anti-Money Laundering Directive, and Cyprus is in full adherence with sanctions issued by the European Union, the United Nations, and the US Treasury OFAC.

Implementation of the 5th EU AML Directive

The transposition of the 5th EU AML Directive into Law took place in September 2019. The full functionality of the Ultimate Beneficial Owner registries will be available from March 2020.

Obligations for Businesses

All individuals and legal entities that perform financial and other business activities are obliged to protect themselves, their companies, and the financial system of Cyprus from money laundering by setting standard procedures and adhering to strict protocols for maintaining records.