Financial Crime World

CYPRUS: Financial Crime Risk Assessment Critical in Combating Money Laundering and Terrorist Financing

In the ongoing fight against financial crime, Cyprus has taken a proactive approach to assessing the risks of money laundering and terrorist financing. The country’s Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007, as amended, requires regulated entities to identify, assess, and mitigate these risks.

Implementing Adequate Policies and Procedures

According to Article 58(d) of the law, regulated entities must implement adequate policies, controls, and procedures to prevent money laundering and terrorist financing. This includes:

  • Identifying and assessing the risks they face
  • Taking into account factors such as:
    • Customer characteristics
    • Countries
    • Products
    • Services
    • Transactions
    • Delivery channels

Customer Identification and Due Diligence

Regulated entities are also required to undertake customer identification and due diligence, which involves:

  • Screening customers and their transactions for suspicious activity
  • Identifying and assessing the risks they face
  • Reporting suspicious transactions or activities to the Financial Intelligence Unit (MOKAS)

Guidelines and Regulation

The Cyprus Securities and Exchange Commission (CySEC) has issued guidelines for regulated entities, including examples of suspicious transactions and activities related to terrorist financing. The agency also provides guidance on proliferation financing risks, which are defined by the Financial Action Task Force (FATF) as the provision of funds or financial services used to support the development, export, or use of weapons of mass destruction.

Effective Processes for Identifying Proliferation Financing Risks

Regulated entities must have in place effective processes to identify, assess, monitor, manage, and mitigate proliferation financing risks. This includes:

  • Identifying and understanding the risks they face
  • Having knowledge of the requirements to counter proliferation financing risks and threats
  • Being aware of common evasive techniques used to circumvent identification of these practices

The legal framework for combating financial crime in Cyprus is robust, with several laws and regulations in place to prevent money laundering and terrorist financing. The country’s National Risk Assessment and Financial Intelligence Unit also provide valuable insights into the risk landscape.

For continuous updates on this topic, readers can consult the following useful links: