Financial Crime World

Cyprus’ Progress in Fighting Money Laundering and Terrorist Financing: A MONEYVAL Report

Published: 25th November 2022

Key Findings

  • Cyprus commended forprogress in improving measures to combat money laundering and terrorist financing
  • Significant challengesremain, particularly in areas of non-profit organizations, virtual asset services providers (VASPs), and investigative authorities’ powers
  • Cyprus is currently compliant with 16 FATF Recommendations, largely compliant with 20 Recommendations, and partially compliant with four Recommendations

Improvements in Non-Profit Sector Oversight

  • Addressing concerns regarding non-profit organizations
  • Implementing measures for assessing terrorism financing (TF) risk and strengthening oversight
  • Partial implementation of measures, with significant progress needed

Virtual Asset Services Providers (VASPs) Regime

  • Significant progress in the implementation of Cyprus’ VASP regime
  • Technical deficiencies, such as the “travel rule” and absence of a national action plan to address risks in the VASP sector

Powers of Law Enforcement and Investigative Authorities

  • Grants investigative authorities limited powers to intercept communication content related to money laundering, terrorist financing, and other predicate offences
  • Substantial improvements needed to grant full powers

Recommendations and Future Expectations

  • Cyprus expected to report back to MONEYVAL within one year on further progress in implementing pending recommendations

Full Report

A detailed report from the Council of Europe’s Committee of Experts on Money Laundering and Terrorist Financing (MONEYVAL) highlights Cyprus’ progress in fighting money laundering and terrorist financing but identifies significant challenges that persist.

Commendation and Challenges

Cyprus has made progress in addressing concerns regarding non-profit organizations, virtual asset services providers (VASPs), and investigative authorities’ powers. However, moderate shortcomings remain.

Advancements in Non-Profit Sector Oversight

MONEYVAL’s second enhanced follow-up report evaluates the legislative, regulatory, and institutional measures taken by the Cypriot authorities to assess TF risk in the non-profit sector and strengthen oversight. Partial implementation of these measures has been noted, with significant progress required.

Advancements in Virtual Asset Services Providers (VASPs) Regime

Significant progress has been made in Cyprus’ implementation of its VASP regime. However, technical deficiencies persist, including the “travel rule” and the absence of a national action plan to address identified risks in the VASP sector.

Powers of Law Enforcement and Investigative Authorities

Substantial improvements are needed to grant investigative authorities the power to intercept communication content related to money laundering, terrorist financing, and other predicate offences, including sexual exploitation, organized criminal activity, fraud, and tax crimes.

Compliance with FATF Recommendations

The report concludes that Cyprus is currently compliant with 16 out of 40 FATF Recommendations, largely compliant with 20 Recommendations, and partially compliant with four Recommendations – non-profit organizations, correspondent banking, new technologies, and powers of law enforcement and investigative authorities.

Future Expectations

Cyprus is expected to report back to MONEYVAL within one year on further progress in implementing pending recommendations.

Availability of the Report

The report is a public document, available at the MONEYVAL website: http://www.moneyval.org