Moneyval published on 12 February 2020 Cyprus’ comprehensive assessment of the effectiveness of anti-money laundering and countering the financing of terrorism (AML/CFT) system and its level of compliance with the Recommendations of the Financial Action Task Force (FATF).
What are the findings?
The assessment, conducted on the basis of the robust FATF methodology by a team of international experts, reflects the measures adopted by Cyprus in the fight against money laundering and terrorist financing over the recent years and identifies areas where further improvements are needed.
Effective measures deployed
Cyprus has deployed several measures over the past few years to effectively mitigate some of the main risks identified in previous reports. Specifically, the assessment points out the following positive elements:
- There is good understanding of the most serious money laundering risks at the national and sectorial level and the national strategy and action plan are in line with these risks.
- There is good level of domestic co-operation and co-ordination between the competent authorities both on policy issues and at an operational level.
- The banking sector has become more effective in mitigating risks.
- The Financial Intelligence Unit has the ability to support operational needs of competent authorities through its analysis and dissemination functions.
- The country has developed mechanisms which are capable of delivering constructive and timely assistance to other countries both on a formal and informal basis.
Moneyval noted that in various aspects major improvements are necessary for the effectiveness of the Cypriot AML/CFT regime. Specifically, the following weaknesses have been identified:
- The competent authorities are not sufficiently pursuing money laundering from criminal proceeds generated outside of Cyprus and have not been proactive at freezing and confiscating foreign criminal proceeds.
- No formal assessment of risks posed by legal persons has been conducted which results in reducing the authorities’ ability to implement targeted mitigating measures on ensuring transparency of legal persons.
- No sufficient implementation of preventive measures by the trust and corporate services sector with major implications on the availability of beneficial ownership information of legal persons and arrangements registered in Cyprus and the reporting of suspicious transactions.
- The supervision of the real estate sector should be significantly enhanced with more monitoring of the real estate transactions.
- The risks related to the Cyprus Investment Programme have not been assessed comprehensively.
- Trust and corporate service providers did not demonstrate a uniform level of understanding of the risks of evasion of targeted financial sanctions for terrorist financing and the proliferation of weapons of mass destruction.
- The Non-Profit sector (NPO) has to be further risk-assessed in order to identify potential vulnerabilities for terrorist financing and money laundering risks.
Cyprus has taken positive steps towards anti-money laundering and countering the financing of terrorism; however, the report calls on the Cypriot authorities to pursue more aggressively money laundering from criminal proceeds generated outside of Cyprus and deploy further measures on mitigating the risks.
Moneyval shall apply an enhanced follow-up procedure and Cyprus is invited to report back at its first plenary in 2021.
The concise version of Cyprus’ assessment can be viewed via this link.