Financial Crime World

Complying with Disclosure Provisions: A Crucial Step in Fighting Money Laundering

Introduction

In an effort to combat money laundering and terrorist financing, lawyers in Cyprus are being reminded of their legal obligation to apply measures to prevent the concealment of such activities.

According to the Prevention and Suppression of Money Laundering Activities Law of 2007, all professionals who carry out certain activities and services have a legal duty to take steps to prevent the concealment of money laundering or terrorist financing activities. This includes lawyers, who are required to report any suspicious transactions or activities to MOKAS (the Cyprus Anti-Money Laundering Authority).

Definition of Money Laundering and Terrorist Financing

The law defines money laundering as:

  • The conversion, transfer, or movement of property derived from a criminal offense for the purpose of concealing or disguising its illicit origin.
  • Similarly, terrorist financing is defined as:
    • The collection of funds for the benefit of persons or organizations connected with terrorism.

Consequences of Non-Compliance

Under the law, lawyers who fail to report their knowledge or suspicion of money laundering or terrorist financing activities may be punished by:

  • Up to five years’ imprisonment
  • A fine not exceeding €5,000 Additionally, “tipping off” - making a disclosure to the person suspected of money laundering or terrorist financing - is also an offense punishable by up to five years’ imprisonment.

Exceptions and Defences

The law provides for certain exceptions and defences, including:

  • Where a lawyer makes a report in good faith to MOKAS
  • Disclosing information to a Money Laundering Compliance Officer as part of established internal procedures

In light of these provisions, lawyers are being advised to take steps to prevent the concealment of money laundering or terrorist financing activities, including:

  • Reporting any suspicious transactions or activities to MOKAS
  • Maintaining accurate records of their clients’ transactions

Quote from the Cyprus Bar Association

“We urge all lawyers to take their legal obligations seriously and to report any suspicious activity to MOKAS. Money laundering and terrorist financing are serious threats to national security and the integrity of our financial system, and we must all do our part to prevent them.” - A spokesperson for the Cyprus Bar Association