Cyprus Makes Progress in Implementing AML Measures

There has been “slight progress” made by Cyprus in implementing anti-money laundering measures, but certain aspects still need to be improved, according to a Moneyval report released on June 20th.

Moneyval is the Council of Europe’s committee evaluating anti-money laundering and terrorist financing measures and, in its annual report for 2022, reported that Cyprus has improved its compliance with FATF (Financial Action Task Force) standards to a certain extent but still needs to work on some fronts.

Cypriot authorities stated, “took measures aimed at improving compliance with the FATF Recommendations concerning non-profit organisations, virtual asset services providers (VASPs) and powers of investigative and law enforcement authorities; however, moderate shortcomings remain. Specifically, the authorities have taken several measures to assess terrorism financing (TF) risk exposure by the non-profit sector and strengthen its oversight activities; however, these measures have not yet been fully implemented.”

According to Moneyval, Cyprus has made “substantial progress” in implementing its VASP regime. Nevertheless, no nationwide implementation plan has been developed to address the risks identified in the sector, creating inadequacies in implementing countermeasures, such as the ‘travel rule.’

The report stated, “In addition, moderate shortcomings remain relating to the absence of powers to intercept the content of communication concerning the investigation of money laundering, terrorism financing and some other associated predicate offences, such as, for example, sexual exploitation, participation in an organised criminal group, fraud, theft, arms trafficking, some corruption offences and tax crimes, among others.” However, the restitution of proceeds of crime across states remains inadequate, and governments are therefore urged to “step up their efforts to strengthen their national frameworks for asset management and recovery.”

Comparing the estimated proceeds of criminal activity with the successful confiscations of illegal assets, Moneyval found that successful confiscations are relatively rare. Chair of Moneyval Elżbieta Frankow-Jaśkiewicz said, “States should not only improve their results in identifying and freezing criminal funds. There is also an urgent need for them to greatly improve their results in confiscating and managing criminal assets, adopt stricter sanctions and increase the number of convictions for serious money laundering offences.” Among the members, Moneyval noted that 72% of recommendations about legislative and institutional reforms had been implemented in their entirety.

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