Cyprus Cracks Down on Financial Crime: The Island Nation’s Legal Framework and Commitment to Combating Money Laundering and Terrorist Financing

Cyprus, the Mediterranean island nation known for its robust financial services sector and growing international business scene, has taken a hardline stance against financial crime. In recent years, Cyprus has implemented strict regulations and frameworks to combat money laundering and terrorist financing.

New Legislation to Combat Money Laundering and Terrorist Financing

In 2021, Cyprus passed the Prevention and Suppression of Money Laundering and Terrorist Financing (Amending) Law, which amended the Prevention and Suppression of Money Laundering Activities Law of 2007. The new legislation was enacted to adapt to the EU Directive 2018/843, also known as the 5th Anti-Money Laundering Directive.

Key Provisions

The new legislation criminalizes the laundering of proceeds from all serious criminal offenses and defines and criminalizes the proceeds generated from the financing of terrorism. The legislation also establishes centralized Ultimate Beneficial Owner (UBO) registries and requires enhanced due diligence on high-risk third-country customers. The regulation of cryptocurrencies and their exchanges is also addressed in the legislation.

Compliance with International Sanctions

Cyprus is committed to following international sanctions imposed by the United Nations Security Council and the European Union. In 2022, the country established the National Unit on the Implementation of Sanctions to enforce these sanctions at home.

Continuous Scrutiny from International Organizations

Despite its efforts, Cyprus faces continuous scrutiny from various international organizations, including the European Union, Organization for Economic Cooperation and Development (OECD), and Council of Europe’s Committee of Experts on Money Laundering and Terrorist Financing (MONEYVAL).

Regular Assessments of Cyprus’ Compliance

MONEYVAL’s latest assessment of Cyprus in 2022 recognized the country’s progress towards improving its implementation of measures to combat financial crimes since the prior review. However, Cyprus must continue to demonstrate its commitment to key areas, including non-profit organizations, virtual asset services providers, and expanding investigative and law enforcement authorities’ powers.

Conclusion

Cyprus’ dedication to combating financial crime is a testament to its commitment to upholding international standards and maintaining a robust and trustworthy financial ecosystem. The island nation remains under MONEYVAL’s enhanced follow-up program and will continue to report back to the organization on its ongoing progress.