03 Dec Cyprus National Assessment of Money Laundering and Terrorist Financing Risks

On the 30 November 2018, the Ministry of Finance of Cyprus has published the first specific ML/TF risk assessment undertaken by the Cyprus Authorities pursuant to Article 7 of the Directive (EU) 2015/849. The first National Risk Assessment (“NRA”) of the risks emanating from money laundering and terrorist financing for Cyprus was conducted using the World Bank methodology, which has as its main pillars the assessment of the related threats to the country and the analysis of the vulnerabilities both on a national level but also from the point of view of the main financial and economic sectors. The project was managed by the Central Bank of Cyprus (‘CBC’) and the Cyprus FIU (‘MOKAS’) and engaged all competent authorities and government services which are represented on the Advisory Authority.

The NRA report consists of two sections, the first addressing money laundering issues and the second addressing terrorist financing. Furthermore, it identified some risk mitigation factors of the system such as the following:

• Risk reducing measures which have been adopted between the years 2012-2017 such as
  • enhancement of the AML/CFT legislation with respect to the powers of the FIU and the competent supervisory authorities, according to the updated FATF Recommendations and the EU legislation; and
  • enhancement of the preventive measures and capacity of the competent supervisory authorities against money laundering and terrorist financing, which included the implementation of a risk based approach to supervision and the investment in IT tools and human resources.

• Comprehensive legal system including Asset Recovery Laws (freezing and confiscation).
• Close cooperation and coordination of the authorities, and law enforcement agencies through bilateral and multilateral relationships as well as through the Advisory Authority.
• Tax transparency and effective exchange of information with counterpart tax authorities, as evidenced by the evaluation by the Global Forum on Transparency and Exchange of Information for Tax Purposes, as well as the availability of independent audit.
• Availability and access to beneficial ownership information and bank account data. 

Some of the areas where more risk/threat reducing measures were deemed as warranted based on the NRA analysis are mentioned below. Relevant specific risk mitigating actions have been drawn up by the Cypriot authorities on the basis of the findings of the assessment, aiming at strengthening the risk mitigating factors of the system. Implementation of these actions commenced at the beginning of 2018 and are being followed up, by the Advisory Authority. Such actions include the following:

• • Issuance of directives to banks on specific topics with a view to strengthening the preventive measures against money laudering and terrorist financing such as reliance on third parties and on risks emanating from abroad.
  • Enhancement of the preventive measures in the administrative services sector, with the upgrading of the internal controls of the obliged entities as well as the frequency of the assessments by the supervisory authorities.
  • Augmentation of the structure, training and capacity of investigators, prosecutors and judiciary, in order to enhance the effectiveness of prosecuting money laundering and terrorist financing offences and confiscating their illegal proceeds.
  • Further enhancement of the resources of the competent supervisory authorities and the FIU.
  • Development of data collection and statistics procedures so that threats and vulnerabilities are correctly identified, to enable closer monitoring and resource allocation.
  • Provision of specialised training to reporting entities such as on terrorist financing.

The Government, the competent supervisory authorities and the FIU, remain committed to taking all the necessary measures for minimising money laundering threats and risks to Cyprus’ system. The NRA provides a very comprehensive and useful tool in assisting all involved, in enhancing the effectiveness of measures taken.

Read the full text here.