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Sanctions Screening in Cyprus: A Critical Component of Anti-Money Laundering and Counter-Terrorist Financing Regulations

Sanctions screening is a crucial aspect of anti-money laundering (AML) and counter-terrorist financing (CFT) regulations in Cyprus. The Cyprus Securities and Exchange Commission (CySEC) requires all regulated entities to implement effective sanctions screening processes to prevent financial transactions with individuals or companies that are subject to economic sanctions.

Purpose of Sanctions Screening

The purpose of sanctions screening is to identify and prevent financial transactions with individuals, organizations, or countries that are designated as terrorist organizations, proliferators of weapons of mass destruction, or violators of human rights. Sanctions can be imposed by the European Union, the United Nations, or other jurisdictions for various reasons, including terrorism, nuclear proliferation, or human rights violations.

Requirements in Cyprus

In Cyprus, sanctions screening is a requirement under the Prevention of Money Laundering and Financing of Terrorism Law (PLML/TFL) and the EU’s Fifth Anti-Money Laundering Directive. Regulated entities, such as investment firms, asset management companies, and other financial institutions, must implement adequate procedures to identify and report suspicious transactions.

How Sanctions Screening Works

Sanctions screening involves checking customer information against a list of designated persons or entities subject to economic sanctions. This includes searching for matches against lists maintained by the EU, the United Nations, and other jurisdictions. Sanctions screening is an ongoing process that requires continuous monitoring and updating to ensure compliance with changing sanctions regulations.

CySEC Guidance and Record-Keeping

CySEC provides guidance on sanctions screening through its regulatory framework and guidelines. Regulated entities must also maintain records of their sanctions screening processes and procedures for a minimum period of five years.

Conclusion

In summary, sanctions screening in Cyprus is a critical component of AML/CFT regulations that requires regulated entities to implement effective procedures to identify and prevent financial transactions with individuals or companies subject to economic sanctions. The Cyprus Securities and Exchange Commission provides guidance on sanctions screening through its regulatory framework and guidelines.