Cyprus Steps Up Financial Crime Prevention Efforts: Comprehensive Framework in Place to Combat Money Laundering and Terrorist Financing
A Robust Framework to Prevent Financial Crimes
Cyprus has solidified its commitment to combating financial crimes by implementing a comprehensive framework to prevent money laundering and terrorist financing. The country’s financial services sector, a vital pillar of its economy, is now protected by a robust combination of European Directives and Regulations with continuous updates.
Recent Developments in Anti-Money Laundering Efforts
The latest development in Cyprus’ anti-money laundering efforts came in 2021 with the passage of the Prevention and Suppression of Money Laundering and Terrorist Financing (Amending) Law. The law amends the original Prevention and Suppression of Money Laundering Activities Law of 2007, aligning it with the EU’s 5th Anti-Money Laundering Directive.
Key Provisions
- Criminalizing Proceeds from Serious Criminal Offenses: The new law criminalizes the laundering of proceeds generated from serious criminal offenses and provides for the confiscation of such funds to deprive criminals of their ill-gotten gains.
- Centralized Ultimate Beneficial Ownership (UBO) Registries: Cyprus has introduced centralized UBO registries accessible to obligated entities demonstrating legitimate interest, as well as private UBO registers for bank accounts.
- Enhanced Due Diligence Requirements: Cyprus has implemented enhanced due diligence requirements for customers from high-risk third countries and defined cryptocurrency, bringing both cryptocurrencies and exchanges under existing anti-money laundering regulations.
International Sanctions and Compliance
Cyprus is committed to following International Sanctions issued by the United Nations Security Council and Restrictive Measures adopted by the European Union. To ensure effective implementation of sanctions, Cyprus established the National Unit on the Implementation of Sanctions in June 2022. This entity oversees the imposition of sanctions and coordinates efforts between various authorities involved.
Audits and Assessments
Cyprus is subject to regular audits by the European Union, the Organization for Economic Cooperation and Development (OECD), and the Council of Europe’s Committee of Experts on Money Laundering and Terrorist Financing (MONEYVAL). In 2022, MONEYVAL conducted an enhanced follow-up assessment, praising Cyprus’ progress in improving its level of compliance with the Financial Action Task Force’s (FATF) 40 recommendations since the prior review.
Areas of Improvement
Key areas where Cyprus has made significant improvements include:
- Non-profit organizations
- Virtual asset services providers
- Powers of investigative and law enforcement authorities
As a result, Cyprus remains within MONEYVAL’s enhanced follow-up program and will continue to report back on its progress in specified timeframes.