Moneyval to visit Cyprus: Advisories issued to the industry

Moneyval experts are due to conduct a visit to Cyprus in May 2019 to assess its national framework for combating money laundering and terrorist financing, as well as the island’s overall compliance with the Financial Action Task Force’s (FATF’s) bench-mark Recommendations.

For the uninitiated, Moneyval – short for the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism – was established by the Council of Europe[1] and operates as FATF’s de facto regional sub-committee for (mostly) those European countries which are not directly members of FATF, including Cyprus and much of South-East Europe.

The visit is important for the Cypriot professional and financial services and industries as it will result in extra oversight and inspections by the national competent authorities (NCAs). Further, and in somewhat of an unusual turn, Moneyval is expected to make onsite visits to law firms and fiduciary service providers – clearly turning up the pressure for those industry participants involved.

Reaction from the Cypriot NCAs

On 31 January 2019, the Cyprus Bar Association (CBA) issued an advisory regarding Moneyval’s upcoming visit. The advisory indicated that Cypriot competent and supervisory authorities will actively participate in the assessment. The relevant authorities for present purposes would include:

  • the CBA itself, responsible for law firm oversight;
  • the Institute of Certified Public Accountants of Cyprus (known as ICPAC – or “SELK” in Greek), responsible for chartered accountancy oversight;
  • the Central Bank of Cyprus (CBC), responsible for oversight of banks, cooperatives, payment service providers, e-money institutions and bureaux de change;
  • the Cyprus Securities and Exchange Commission (CySEC), responsible for oversight of administrative services providers, investment firms, alternative investment funds and their managers and UCITS management companies among others. CySEC issued a notice on 8 March which can be found here;
  • the Insurance Companies Control Service (ICCS), which acting through its supervisor is responsible for oversight of insurers, reinsurers and insurance intermediaries;
  • the Cyprus Gaming and Casino Supervision Commission, responsible for oversight of casinos;
  • the National Betting Authority, responsible for sports betting and other equivalent activity oversight; and
  • the Unit for Combating Money Laundering (known as MOKAS, from the Greek Μονάδα Καταπολέμησης Αδικημάτων Συγκάλυψης), which is the financial intelligence unit for Cyprus.

Under the CBA advisory it is stressed that the regulator has adopted a number of measures and procedures with a view to reinforcing the level of commitment of its regulated members. Members have also been notified that Moneyval is expected to carry out site visits to regulated entities, including law firms and corporate service providers, in order to evaluate the overall understanding, implementation and effectiveness of the policies, procedures and measures currently in place for the enhancement of the regulatory framework for combating and preventing money laundering and terrorist financing.

Above all, the CBA urges its members to ensure full compliance with applicable legislation and CBA guidance, as well as to remain cognisant of the applicable CBA policies, measures and procedures.

The CBA emphasised the high importance of this assessment to the island itself, its economy and the legal profession as a whole.

The link to the relevant CBA advisory can be found here.

A similar approach is to be expected from the other NCAs referred to above.

Steps required to be taken by firms

Now more than ever it will be crucially important for regulated firms and other “obliged entities” to ensure their compliance manuals and systems and controls are fully compliant with the national framework, comprising, where appropriate, compliance with the EU’s Fourth and Fifth Anti-Money Laundering Directive (4AMLD and 5AMLD).

Harneys is here to help and can assist with reviews and internal audits or any related question on the Cypriot AML and financial crime regime.

If you have any questions, please contact Andrea Moundi Savvides, Marina Stavrou or your usual Harneys contact.

[1]     For the avoidance of doubt, the Council of Europe (CoE) is not to be confused with the European Union. The CoE is the continent’s leading human rights organisation comprising 47 member states and hosts the European Court of Human Rights (ECHR).