Financial Crime World

Cyprus Tackles Money Laundering and Terrorist Financing Risks: First National Assessment Reveals Medium-Level Threat and Vulnerability

October 2018, Nicosia

Background

In an effort to safeguard its economy and financial system from the threats of money laundering (ML) and terrorist financing (TF), the Cyprus authorities have completed their first comprehensive assessment using the World Bank’s risk assessment methodology. According to the findings, Cyprus faces a medium level of ML and TF risks.

National ML/TF Risk Assessment

The National ML/TF Risk Assessment of Cyprus was led by the Central Bank of Cyprus (CBC) and the Cyprus Financial Intelligence Unit (MOKAS), with active participation from other competent authorities and the private sector. The assessment included a thorough examination of the national ML and TF threats and vulnerabilities within various economic sectors.

ML/TF Threats

  • Cyprus is considered a low-crime domestic environment, but there remain significant ML and TF risks.
  • Areas of concern include fraud and related offenses, drug offenses, corruption, tax evasion, theft, and smuggling of counterfeit goods.
  • External threats mainly come from the international engagement of the financial system and economy.

Vulnerable Sectors

  1. Banking sector:

    • International exposure.
    • Reliance on third parties for customer identification and due diligence procedures.

  2. Trust and company service providers:

    • Different AML/CFT directives from their supervisors.
    • Lack of a unified communication platform for information exchange.

  3. Real estate sector: Details on this sector’s vulnerabilities are not mentioned in the given text.

Mitigation Measures

The Cyprus authorities acknowledge these risks and plan to implement targeted measures including:

  1. Enhancing awareness.
  2. Improving resources.
  3. Optimizing IT technology for transaction monitoring.

A detailed action plan will be presented as a separate document.

European Commission’s Assessment Consideration

Cyprus completed its assessment before the publication of the European Commission’s first supranational ML/TF risk assessment. The results of the European assessment will be taken into consideration during the first update of the Cyprus National Risk Assessment.