Banks’ Responsibilities in Preventing Financial Crime in Cyprus

The Council of Europe’s Committee of Experts on Money Laundering and Terrorist Financing (MONEYVAL) has released its second enhanced follow-up report on Cyprus, revealing moderate progress in combating money laundering and terrorism financing.

Challenges Remain

Despite some improvements, Cyprus still faces challenges in its fight against financial crime. The country’s non-profit sector remains at risk of being exploited for terrorist financing purposes, and the authorities have yet to fully implement measures aimed at strengthening oversight activities.

Shortcomings Identified

The report highlights several shortcomings that need to be addressed:

• The VASP regime has made progress, but lacks a national action plan to address identified risks.
• Technical deficiencies persist in implementing preventive measures, including the “travel rule”.
• Cyprus is still without powers to intercept the content of communication during money laundering and terrorism financing investigations.

Compliance Rating

The report rates Cyprus as:

• Compliant with 16 FATF Recommendations
• Largely compliant with 20
• Partially compliant with four
• No ratings were given for non-compliance

Future Action Required

Cyprus has been tasked with reporting back to MONEYVAL on its progress in implementing pending recommendations within the next year. The country’s banking sector is expected to play a crucial role in preventing financial crime by implementing robust measures to prevent money laundering and terrorism financing.

Recommendations for Improvement

The report highlights that Cyprus must prioritize:

• Strengthening its regulatory framework
• Improving risk assessment
• Enhancing the powers of investigative authorities to combat financial crime effectively

Only then can the country ensure a safe and secure financial system for its citizens and international partners.