Financial Crime World

Financial Crime Prevention Strategies in Cyprus: A Comprehensive Framework

Cyprus has made significant strides in combating financial crime by implementing a robust framework to prevent money laundering and terrorist financing. The country’s financial services sector, a vital pillar of its economy, is subject to stringent regulations and guidelines.

Background

In 2021, Cyprus enacted the Prevention and Suppression of Money Laundering and Terrorist Financing (Amending) Law, amending the Prevention and Suppression of Money Laundering Activities Law of 2007. This legislation brought Cyprus in line with the EU’s 5th Anti-Money Laundering Directive, which introduced stricter measures to prevent financial crimes.

Key Elements of the 5th AML Directive

  • Centralized UBO (Ultimate Beneficial Owner) registries, accessible to obliged entities demonstrating a legitimate interest
  • Requirements for private UBO registers for bank accounts
  • Enhanced due diligence on customers from high-risk third countries
  • Legal definition of cryptocurrency, bringing both cryptocurrencies and exchanges under the scope of existing anti-money laundering regulations

International Sanctions and Implementation

Cyprus is obligated to follow international sanctions issued by the United Nations Security Council and restrictive measures adopted by the European Union. To ensure effective implementation of these sanctions, Cyprus established the National Unit on the Implementation of Sanctions in June 2022, which oversees the imposition of sanctions.

Recognized Efforts

The country’s efforts to combat money laundering and terrorist financing have been recognized by international organizations, including:

  • The European Union
  • The Organization for Economic Cooperation and Development (OECD)
  • The Council of Europe’s Committee of Experts on Money Laundering and Terrorist Financing (MONEYVAL)

MONEYVAL Assessment

In 2022, MONEYVAL conducted its latest assessment of Cyprus, praising the country’s progress in improving its level of compliance with the Financial Action Task Force’s (FATF) 40 recommendations.

Key Measures Taken by Cyprus

  • Strengthening regulations for non-profit organizations
  • Virtual asset services providers
  • Investigative and law enforcement authorities

As a result, Cyprus remains within MONEYVAL’s enhanced follow-up program and will continue to report on its progress in combating financial crime.