Cyprus Bolsters AML/CFT Measures, Receives Moneyval’s Nod
In a significant development for Cyprus’ financial oversight, the latest Moneyval report has acknowledged the country’s enhanced efforts in money laundering prevention and combating financing of terrorism. The Cyprus Securities and Exchange Commission (CySEC) has interpreted this as a strong endorsement of its financial regulation capabilities, with a particular emphasis on the burgeoning crypto sector.
The Moneyval report highlighted Cyprus’ improved adherence to the Financial Action Task Force’s (FATF) Recommendation 15, which pertains to new technologies, and noted advancements in aligning with Recommendation 8 concerning non-profit organizations. CySEC Chairman George Theocharides expressed satisfaction with the progress, emphasizing the clear vote of confidence in Cyprus’ regulatory framework, especially regarding Crypto-Asset Services Providers (CASPs).
Since November 2022, Cyprus has been proactive in refining its virtual asset service providers regime, addressing most of the minor deficiencies. The country has also initiated measures to evaluate and mitigate terrorism financing risks within the non-profit sector, although full implementation is pending.
Moneyval, a monitoring body of the Council of Europe, commended Cyprus for addressing many of the technical compliance gaps identified in its 2019 Mutual Evaluation Report. Out of 40 Recommendations, Cyprus now boasts 16 compliant ratings, 21 largely compliant ratings, and 3 partially compliant ratings.
Dr. Theocharides highlighted CySEC’s efforts in evaluating and mitigating risks associated with crypto-assets and improving compliance among service providers. He reiterated Cyprus’ commitment to enhancing its AML/CFT system through continued collaboration with local authorities and implementing the National Action Plan derived from the National Risk Assessment.
The recent Moneyval report not only reflects Cyprus’ technical compliance strides with FATF Recommendations but also underscores the significant headway made in regulating crypto-assets. The nation has adopted a comprehensive National Action Plan to address ML and TF risks related to virtual assets and CASPs, including issuing guidance on preventing and suppressing terrorist financing in crypto-asset activities.
With these efforts, Cyprus has achieved either ‘compliance’ or ‘large compliance’ on 37 out of the 40 FATF Recommendations. The report also details legislative and regulatory measures targeting CASPs, including the use of blockchain analytical tools for better oversight. Following these positive developments, Cyprus anticipates further improvements in its AML/CFT regime by May 2025, as per the next scheduled Moneyval evaluation.
The recent legislative amendments, including Law 98(I)/2023, aim to align Cyprus’ AML/CFT Law with Moneyval Committee recommendations and FATF standards. These changes, along with amendments to the CySEC Directive on the CASPs Register, are set to bolster Cyprus’ position in the next evaluation of Recommendation 15.
