CySEC Intensifies Oversight on CIFs’ Cross-Border Activities
The Cyprus Securities and Exchange Commission (CySEC) has announced a significant increase in the scrutiny of cross-border activities by Cypriot Investment Firms (CIFs), particularly those dealing with complex financial products. In a recent press release, CySEC disclosed its supervisory priorities for the upcoming year, highlighting the risks associated with products such as Contracts for Differences (CFDs). The commission is ramping up supervision of high and medium high-risk firms, with a keen focus on their operations beyond Cyprus.
George Theocharides, the Chair of CySEC, underscored the necessity of strong governance and compliance measures within regulated entities. He issued a stark warning: “Regulated entities that do not have adequate governance structure and effective control functions around compliance, internal audit and risk management will not survive in the current regulatory environment. There can be no last chances when investors are being put at risk.” This statement reflects CySEC’s renewed commitment to fostering a compliance-oriented culture among management and key function holders, as well as its intent to proactively mitigate adverse events.
CIFs are being urged by the regulatory body to reassess their policies, procedures, and internal controls to ensure they meet regulatory standards. CySEC’s supervisory agenda for 2024 is comprehensive, covering professional conduct rules, client onboarding processes, marketing communications, and adherence to sustainability requirements.
Moreover, CySEC is placing a spotlight on enhanced oversight of asset managers, ensuring they comply with sustainability risks and data reporting obligations as per the Alternative Investment Fund Managers Directive (AIFMD). With new regulations on the horizon, including the Markets in Crypto-Assets Regulation (MiCA) and the Digital Operational Resilience Act (DORA), CySEC is gearing up with new strategies and tools to strengthen its supervisory framework. Theocharides emphasized the importance of leveraging technology to improve business resilience and regulatory compliance amidst changing market conditions.
The supervisory priorities set by CySEC are informed by a thorough analysis of market trends, EU regulatory developments, and guidelines from the European Securities and Markets Authority (ESMA), ensuring a robust regulatory approach for the year ahead.
