Member of Financial Action Task Force? No, but Cyprus is a member of MONEYVAL.
On FATF blacklist? No.
Member of Egmont? Yes.
Anti-Money laundering background
The financial services and international business sector in Cyprus is one of the vital pillars of the Cyprus economy. That being said, Cyprus aims to be in full compliance with the AML European framework, and in this respect constantly implements changes in its local laws to align with EU directives and regulations.
Cyprus' latest MONEYVAL evaluation took place during May 2019. The third Enhanced Follow-up Report and Technical Compliance Re-rating on Cyprus was adopted by the MONEYVAL Committee at its 66th Plenary Meeting in Strasbourg between December 11-15, 2023. The report shows that Cyprus has improved its measures for tackling money laundering and combatting financing of terrorism, The report also highlights better compliance with Recommendation 15 on new technologies, as well as some progress with Recommendation 8 on non-profit organisations.
Cyprus has reached the general expectation of having remedied most of the technical compliance deficiencies at the end of its third year of follow-up, and therefore the frequency of reporting may be reduced. Cyprus will remain under enhanced follow-up and is required to report back to MONEYVAL on progress to strengthen its implementation of AML/CFT measures by May 2025.
MONEYVAL rated Cyprus "Compliant" or "Largely Compliant" on 37 out of 40 of the FATF Recommendations.
- 16 Recommendations rated Compliant
- 21 Recommendations rated Largely Compliant
- 3 Recommendations rated Partially Compliant
Cyprus has taken a number of measure in respect of non-profit organisations but some shortcomings remain, and Cyprus is therefore still rated Partially Compliant in respect of Recommendation 8.
It is important to note that during October 2018, Cyprus published the first National Risk Assessment of Money Laundering and Terrorist Financing Risks (NRA). The Competent Authority responsible for overseeing the NRA project was the Advisory Authority against Money Laundering and Terrorist Financing, which provided its findings to the Council of Ministers accordingly.
During November 2021 the Ministry of Finance of the Republic of Cyprus published the National Risk Assessment (the NRA) on Money Laundering and Terrorist Financing (ML/TF) risks of virtual assets (VA) activities and virtual asset service providers (VASPs). The findings and recommendations of NRA were taken into account in the drafting of the primary and secondary legislation on AML/CFT enacted in 2021 for the transposition of the Fifth AML Directive into local law, for this respective sector. The NRA has been published on the Ministry of Finance's website, as per the provisions of art 57 of the Prevention and Suppression of Money Laundering and Terrorist Financing Law and in accordance with the EU AML/CFT directives.
It is worth noting that Cyprus is also one of the 45 countries within the OECD which has successfully implemented transparency and effective exchange of information for tax purposes, agreed to standards relating to taxation, and adopted the organisation's Common Reporting Standard in the early 2000s. These are all steps which help to combat tax evasion and improve international tax and financial transparency.
Legislation on prevention of money laundering activities
Cyprus' first AML legislation was the Concealment, Investigation and Confiscation of Income from Certain Criminal Acts Law of 1996. The Prevention and Suppression of Money Laundering Activities Law 2007 (188(I)/2007) as amended from time to time (the "Cyprus AML Law" or the "Law") transposed the EU's Fifth AML Directive (2018/843) through the Law 61(I)/2021. This broadens the scope of AML oversight under Directive 2005/60/EC, to include new areas such as external threats to domestic markets and introduces more rigorous rules regarding ultimate beneficial ownership, with the ultimate goal of establishing transparency of public registers.
Objectives of the Cyprus AML Law
The principal objectives of Cyprus' AML Law are to prevent the laundering of proceeds of serious criminal offences ("predicate offences"), including terrorist financing and related activities, to detect and prosecute money laundering activities and to provide for the restraint and confiscation of illicit funds. The Law makes money laundering or assisting in it a criminal offence. It also established MOKAS.
According to the Law, no person shall, in the course of a financial business that he carries on in or from Cyprus, form a business relationship, or carry out a one-off transaction with or on behalf of another, without applying the prescribed procedures with regard to identification, record-keeping and internal reporting as set out in the Law
Entities under scrutiny
A number of financial institutions, organisations and professional bodies, whose profession or business encompass a high risk of being involved in money laundering offences, such as banking institutions, cooperative societies, investment firms, stockbroking firms, accountants, insurance companies, real estate agents, advocates, trust and company service providers, money transfer services and dealers in precious metals and precious stones as well as casinos (referred to as "sensitive professionals") fall within the ambit of the Law.
The Law details what constitutes "Financial Business" and "Other Business" which are subject to its provisions. Undertakings engaged in these activities are obliged to operate effective procedures for customer identification, record-keeping and internal reporting, and to appoint an appropriate person as the money laundering compliance officer (MLRO).
The Law also contains powers to confiscate the assets of persons who are convicted of a predicate offence, and to restrain the assets of such persons and of persons who are reasonably suspected of involvement in money laundering activities.
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Originally published by Thomson Reuters.
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