The Cypriot authorities have been called to be more aggressive in the fight against money laundering from criminal proceeds outside Cyprus. This call was made by the Council of Europe’s anti-money laundering body MONEYVAL in a report that makes a comprehensive assessment of the effectiveness of Cyprus’s 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) published on February 12, 2020. MONEYVAL noted that in various aspects major improvements are necessary for the effectiveness of the Cypriot AML/CFT regime. The authorities’ ability to implement more targeted mitigating measures to ensure the transparency of legal persons has reduced because Cyprus has not yet conducted a formal assessment of risks posed by legal persons, despite having a developed company formation and administration sector.
Further progress is required, with certain areas requiring major improvement even though significant strides have been made by Cyprus to implement a comprehensive supervisory framework for trust and corporate services providers. The real estate sector has an exponentially increased risk since it has become the preferred choice of investment to acquire citizenship under the Cyprus Investment Programme. As this risk has not been properly mitigated, the report recommends that supervision of the real estate sector should be significantly enhanced and that measures should be taken to increase the level of compliance with preventive measures by real estate agents.
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 has not been displayed by trust and corporate service providers thereby constituting a significant vulnerability.
The evaluation of Cyprus’ anti-money laundering and combating the financing of terrorism system was based on the 2012 Financial Action Task Force Recommendations and was prepared using the 2013 Methodology. Based on the results of its evaluation, MONEYVAL decided to apply its enhanced follow-up procedure and invited Cyprus to report back at its first plenary in 2021.
