Financial Crime World

Cyprus Fights Financial Crimes, but Gaps Remain: Moneyval Report

The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (Moneyval) has released a report highlighting Cyprus’ efforts to combat financial crimes. While some progress has been made, the island nation still lags behind in addressing certain weaknesses.

Compliance with FATF Recommendations

According to the report, Cyprus is rated:

  • Fully compliant with 16 out of 40 Financial Action Task Force (FATF) recommendations
  • Highly compliant with 20 recommendations
  • Partially compliant with four recommendations, specifically:
    • Non-profit organizations
    • Correspondent banks
    • New technologies
    • Powers of prosecuting and investigative authorities

Progress Made

Moneyval experts praised Cyprus for taking steps to improve its compliance with FATF recommendations in areas such as:

  • Non-profit organizations
  • Virtual currency service providers
  • Investigative authorities’ powers

However, moderate deficiencies still remain.

Remedies Urged

The report noted that there is no recommendation for which Cyprus is graded as non-compliant. Nevertheless, the Cypriot authorities have been urged to continue addressing any remaining weaknesses.

Assessment Focus

The assessment focused on a range of legislative, regulatory, and institutional measures taken by the Cypriot government in relation to:

  • Risk assessment and supervision of the non-profit sector
  • Investigative authorities’ powers
  • Cash delivery techniques
  • Bearer negotiable instruments
  • Virtual assets and related services

Technical Weaknesses

While Cyprus has made some progress in assessing the risk of terrorist financing from the non-profit sector and strengthening oversight, these measures have not been fully implemented.

Additionally:

  • There is no national action plan to address the risks identified in the virtual assets sector.
  • Technical weaknesses remain in the implementation of deterrent measures, including the “travel rule.”
  • Minor deficiencies persist regarding the absence of necessary authority to monitor telecommunications in the context of investigating money laundering, terrorist financing, and other basic crimes.

Scope of Recording Conversations

The report highlighted that the recording of conversations only covers specific offenses related to money laundering, such as:

+ Murder or manslaughter
+ Human trafficking
+ Drug trafficking
+ Corruption
+ Counterfeiting

However, this scope is limited, as court orders do not extend to investigating other financial crimes like:

+ Sexual exploitation
+ Fraud
+ Theft
+ Arms trafficking
+ Corruption offenses punishable with less than five years' imprisonment.

Future Efforts

Cyprus has been encouraged to continue its efforts to address these remaining weaknesses and strengthen its anti-money laundering measures.