Financial Crime World

Cyprus Cracks Down on Financial Crime: An In-depth Look at the Island Nation’s AML Regulations and Compliance

Cyprus: A Financial Hub with a Strong Commitment to Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) Compliance

Amidst the flourishing financial services and international business sector, Cyprus has taken significant steps to address money laundering (ML) and terrorist financing (TF) within its borders. The European Union (EU) member country’s legal framework aligns with European Directives and Regulations, receiving frequent updates to counteract evolving threats.

Recent Regulatory Developments in Cyprus to Tackle Money Laundering and Terrorist Financing

The Prevention and Suppression of Money Laundering and Terrorist Financing (Amending) Law of 2021

  • Criminalizes proceeds of serious criminal offenses, with provisions for their confiscation
  • Introduces centralized Ultimate Beneficial Owner (UBO) registries accessible to obliged entities
  • Regulations aligned with the EU’s 5th Anti-Money Laundering (AML) Directive

Additional Regulatory Measures

  • Private UBO registers for bank accounts
  • Enhanced due diligence for high-risk third-country clients
  • A legal definition of cryptocurrency, applicable to exchanges
  • Compliance with international sanctions from the UN and the EU

The National Unit on the Implementation of Sanctions

Established in June 2022, this unit is tasked with overseeing the implementation of sanctions in a complex environment involving multiple authorities.

International Recognition of Cyprus’ AML and CTF Efforts

Cooperative and Informative Reviews

  • EU, Organization for Economic Cooperation and Development (OECD), and the Council of Europe’s Committee of Experts on Money Laundering and Terrorist Financing (MONEYVAL) conducted audits
  • Latest assessment in 2022 resulted in positive feedback, with substantial progress toward the FATF’s 40 recommendations since the initial evaluation

Cyprus continues to report on progress in enhancing its measures against ML and TF and remains within MONEYVAL’s enhanced follow-up program.

Ongoing Improvements and Key Regulatory Areas in Cyprus

Some areas of focus for future improvements include:

  • Non-profit organizations
  • Virtual asset services providers
  • Powers of investigative and law enforcement authorities