Anti – money Laundering measures
Cyprus enacted the appropriate legislation and has taken effective regulatory and other measures by putting in place suitable mechanisms for the prevention and suppression of money laundering and terrorist financing activities. Moreover, Cyprus is committed to apply all the requirements of international treaties and standards in this area and, specifically, those deriving from the European Union Directives.
On 13/12/2007 the House of Representatives enacted “The Prevention and Suppression of Money Laundering Activities Law” (hereinafter to be referred to as “the Law”) by which the former Laws on the Prevention and Suppression of Money Laundering Activities of 1996-2004 were consolidated, revised and repealed. Under the current Law, which came into force on 1 January 2008, the Cyprus legislation has been harmonised with the Third European Union Directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (Directive 2005/60/ΕC).
The present Law, as the previous one, designates the Central Bank of Cyprus as the competent supervisory authority for persons engaged in banking activities and money transfer business. Under this framework, the Central Bank of Cyprus has the responsibility of supervising and monitoring the compliance of banks and money transfer businesses with the provisions of the Law for the purpose of preventing the use of the financial system for money laundering and terrorist financing activities.
Since 1997 and by virtue of the powers vested to it under the Law, the Central Bank of Cyprus issued several Directives to banks and money transfer businesses which determine the practice and procedures that should be implemented by those entities for the effective prevention of money laundering and terrorist financing so as to achieve full compliance with the requirements of the Law.
In April 2008, the Central Bank of Cyprus has issued a revised Directive to the banks, in accordance with the provisions of the Law of 2007, requiring the introduction of new revised policies and procedures, as well as the upgrading and enhancement of the measures and systems for the effective prevention of money laundering and terrorist financing in line with the FATF standards and the Directives of the European Union in this sector. It is emphasized that the Law explicitly states that Central Bank of Cyprus’ Directives are binding and compulsory to all persons to whom they are addressed.
Furthermore, since 1997, a special Unit for Combating Money Laundering has been set up at the Attorney General’s Office, which is responsible for the receipt and analysis of suspicious transaction reports and money laundering investigations. Ιn the course of money laundering investigations, the above Unit may apply to the Court and obtain an order for the disclosure of information addressed to any person, including banks, who may be in possession of information related to the investigation as well as orders for the freezing and confiscation of funds and property suspected to be derived from money laundering.
The anti-money laundering measures taken in Cyprus have been repeatedly evaluated, in the last few years, by international organisations such as the Moneyval Committee of the Council of Europe and the FATF.
The Council of Europe (Moneyval Committee) assessed three time the Cyprus’s anti-money laundering system in April, 1998, September, 2001 and April 2005. All subsequent evaluation reports concluded that Cyprus has implemented in a generally sound and comprehensive manner measures against money laundering and terrorist financing in line with international standards and has put in place a very comprehensive legal framework to that effect.
The latest report assessed and rated Cyprus, with very good results, for its level of compliance against the 49 Recommendations of the Financial Action Task Force against money laundering and terrorist financing.
Cyprus’s anti-money laundering system was subject to review by the FATF in the context of the latter’s initiative to identify “non-cooperative countries and territories” in the international fight against money laundering. In its official report published in June 2000, the FATF also recognised that the anti-money laundering system of Cyprus is in line with international standards and excluded Cyprus from the published list of “non-cooperative countries and territories”.
Moreover, in July 2001, the Internal Revenue Service of the United States of America, officially approved Cyprus’s “Know-Your-Customer” rules which form a basic part of Cyprus’s anti-money laundering system. As a result of the above approval, banks in Cyprus, which may be acquiring US Securities on behalf of their customers, are eligible to enter into a “withholding agreement” with the Internal Revenue Service and become qualified intermediaries.
This information is provided by the Central Bank of Cyprus.