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Cyprus Banks Tighten Know Your Customer (KYC) Requirements

Strengthening Financial Institutions Against Money Laundering Activities

In a bid to prevent banks from being used for money laundering activities, Cyprus has strengthened its Know Your Customer (KYC) requirements. The new regulations aim to ensure that financial institutions have a thorough understanding of their customers and their financial dealings.

Objectives of the KYC Policy

The objectives of the KYC policy are threefold:

  • Prevention of Money Laundering: To prevent criminal elements from using the banking system for money laundering activities.
  • Risk Management: To enable banks to manage risks more efficiently by understanding their customers’ financial dealings better.
  • Compliance with Laws and Regulations: To comply with relevant laws and regulatory guidelines.

Implementation of KYC Guidelines

Under the KYC guidelines, banks are required to verify the identity and address of each customer before opening an account. This involves requesting documents such as:

  • A national identity card or passport for identification purposes.
  • A recent utility bill to confirm residential address.

Prevention and Suppression of Money Laundering Activities Law

The Prevention and Suppression of Money Laundering Activities Law, enacted in 2007, has harmonized Cyprus’ legislation with the Third European Union Directive on the prevention of money laundering and terrorist financing. By implementing this legislation, Cyprus has demonstrated its commitment to complying with international standards in combating money laundering and terrorist financing activities.

Implementation of Anti-Money Laundering Controls

Financial institutions are required to implement appropriate controls for detecting and reporting suspicious and potentially illegal activities. This includes:

  • Providing training to staff on KYC/AML procedures.
  • Ensuring that staff can identify potential risks and take necessary steps to mitigate them.

Importance of Compliance with KYC Requirements

Compliance with the KYC procedure is crucial as it forms part of the anti-money laundering laws and regulations aimed at preventing income generation through illegal and criminal actions. Failure to comply with these requirements could result in severe consequences, including:

  • Fines.
  • Reputational damage.

Further Information on Complying with KYC Requirements

For further information on complying with the KYC requirements, financial institutions are advised to get in touch with relevant authorities or regulatory bodies.