Financial Crime World

Cyprus Cracks Down on Money Laundering: A Comprehensive Guide to AML Laws, Penalties, and Compliance in Cyprus

Cyprus, a European Union (EU) member state, enforces strict anti-money laundering (AML) laws aimed at preventing financial crimes, such as money laundering and terrorist financing. This guide explains the legislation, its scope, prohibited activities, penalties, and additional requirements in Cyprus.

1. Criminalizing Money Laundering in Cyprus

  • Cyprus has legislation making money laundering and terrorist financing a criminal offense
  • Implements the EU’s Fourth and Fifth AML Directives (Directive 2015/849 and 2018/843)

2. Scope of the Cyprus AML Law

  • Applies to “Obliged Entities,” including credit institutions, professional bodies, businesses, and crypto-asset service providers
  • Covers banking institutions, cooperative societies, investment firms, stockbrokers, accountants, insurance companies, real estate agents, advocates, trust and company service providers, money transfer services, dealers in precious metals and stones, casinos, and others

3. Prohibited Activities

Under the Cyprus AML Law:

  • Money laundering, terrorist financing, and related activities are prohibited
  • Obliged entities cannot form business relationships without following prescribed procedures

4. Defining Money Laundering

  • Money laundering involves using or enjoying proceeds of illegal activities
  • The objective of the Cyprus AML Law is to criminalize all types of money laundering and seize proceeds
  • Anyone knowingly handling assets derived from criminal activities can be held liable
  • Liability extends to those who assist, assist in, or facilitate a predicate offense
  • Corporate entities can be prosecuted as well

6. Penalties for infringing the Cyprus AML Law

  • Individuals face imprisonment for up to fourteen years or a fine of up to EUR 500,000
  • Corporate entities excluded from public benefits, grants, and tenders, with potential closure

7. Extra-Territorial Reach

  • Regardless of jurisdiction, parties involved in a criminal activity under the Cyprus AML Law face penalties

8. Additional Requirements and Reporting Obligations

  • Legal entities in Cyprus must register UBOs in a separate public register
  • Organizations in “relevant financial business” must prevent misuse and report suspicious transactions

9. Penalties for Failing to Comply

  • Failing to report UBO information properly: EUR 200 initial charge and EUR 100 per day up to EUR 20,000
  • Providing false data: imprisonment for up to 2 years or a fine of up to EUR 100,000
  • Deliberately prejudicing investigations: imprisonment for up to 2 years or a fine of up to EUR 50,000 (or both)

10. Enforcing Cyprus AML Law

  • The Financial Intelligence Unit for Combating Money Laundering (MOKAS) investigates and enforces Cyprus AML Law
  • Contact Information for MOKAS: P.O. Box 23768, 1686 Nicosia | T: +357 224 460 18 | F: +357 223 170 63 | Email: mokas@mokas.law.gov.cy