Cyprus Fails to Fully Implement Anti-Money Laundering Measures Despite Progress

Despite showing improvements in its efforts to combat money laundering and terrorism financing, Cyprus has fallen short of fully implementing anti-money laundering measures, a recent evaluation by the Council of Europe’s anti-money laundering and counter-terrorism financing body MONEYVAL has revealed.

Assessment Highlights Shortcomings

According to the assessment, which focused on legislative, regulatory and institutional measures, moderate shortcomings still exist in Cyprus’ compliance with Financial Action Task Force (FATF) standards. While progress has been made in certain areas, such as:

• Non-profit organizations
• Virtual asset services providers

further efforts are needed to fully implement these measures.

Technical Deficiencies and Lack of National Action Plan

The evaluation also highlighted:

• Technical deficiencies in the implementation of preventive measures, including the “travel rule” which requires service providers to share customer information during transactions.
• The lack of a national action plan to address the risks identified within the virtual asset services provider sector.

Investigative Capabilities and Asset Recovery

The assessment revealed moderate shortcomings in the investigative capabilities of Cypriot authorities, including:

• The absence of powers to intercept communication content related to investigations of money laundering, terrorism financing and other associated predicate offenses.
• Insufficient recovery of proceeds from crime across states.

Recommendations and Next Steps

MONEYVAL has urged governments to step up their efforts to strengthen their national frameworks for asset management and recovery. The organization’s chair, Elżbieta Frankow-Jaśkiewicz, emphasized the need not only to freeze but also to seize and confiscate criminal funds, highlighting the importance of enhancing the powers and resources of criminal asset recovery and management offices.

The evaluation comes as MONEYVAL assesses compliance with international standards and developments in the legal and institutional frameworks to counter money laundering and terrorism financing in 33 states and territories. Cyprus is among 21 countries that were subject to an enhanced follow-up procedure for their limited level of compliance with anti-money laundering and combating the financing of terrorism (AML/CFT) standards.

Conclusion

The report’s findings are a wake-up call for Cyprus, which must intensify its efforts to combat financial crime and ensure that its laws and regulations are effective in preventing money laundering and terrorism financing.