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Anti - Money Laundering Measures

The Government of the Republic of Cyprus recognizes fully the existence and the dimensions of this international problem. It is fully cognizant also of the dangers for possible abuse of its financial facilities for criminal activities, including money laundering and terrorist financing. The fight against money laundering and terrorist financing, through international cooperation, has become one of the top priorities of our foreign policy, by both promoting the necessary political will and determination, and ensuring that MOKAS, Cyprus Financial Intelligence Unit (FIU), supervisory authorities and other competent bodies cooperate regularly with their counterparts in other countries which face the same risks and dangers.

LEGISLATIVE FRAMEWORK

Latest developments concerning international instruments in the field of combating money laundering and relevant topics, is the signing by Cyprus of the most recent UN conventions:
· UN Convention Against Transnational Organized Crime and its two Protocols (Dec. 2000)
· UN Convention for the Suppression of the Financing of Terrorism (Nov.2001)

Cyprus has ratified the UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Vienna Convention) and the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (Strasbourg Convention).

With regards to domestic legislation, the Republic of Cyprus enacted, in May 1996, the Prevention and Suppression of Money Laundering Activities Law (No. 61(I)/96). This law criminalized money laundering from all serious crimes and provided for the confiscation of criminal proceeds from serious crimes. It also codified actions that banks and non-bank financial institutions had to take, including customer identification (drug related money laundering was criminalized by previously enacted legislation). Subsequent amendments to this piece of legislation extended the list of predicate offences to include all crimes punishable with imprisonment in excess of one year and facilitated the exchange of financial information with other FIUs as well as the sharing of assets with other governments.

On 13/12/2007 the House of Representatives enacted “The Prevention and Suppression of Money Laundering Activities Law” (hereinafter to be referred to as “the Law”) by which the former Laws on the Prevention and Suppression of Money Laundering Activities of 1996-2004 were consolidated, revised and repealed. Under the current Law, which came into force on 1 January 2008, the Cyprus legislation has been harmonised with the Third European Union Directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (Directive 2005/60/ΕC).

The law recognizes the important role of the financial and non- financial sectors for the forestalling and effective prevention of money laundering and terrorist financing activities and places additional administrative requirements on all institutions, including banks, engaged in financial and designated non financial activities. The law requires all persons engaged in relevant financial and other business (banks, financial institutions, lawyers, accountants, trust and company service providers, real estate agents and dealers in precious metals and stones) to establish and maintain specific policies and procedures to guard against their business being used for the purposes of money laundering and terrorist financing. It specifically requires all those persons implement customer identification and record keeping procedures, appoint compliance officers and offer training and education to their employees. In essence these procedures are designed to achieve two objectives: firstly, through the strict implementation of the “know your customer” principle, in order to facilitate the recognition and reporting of suspicious transactions to MOKAS and, secondly, through adequate records keeping procedures to enable a bank - if a customer comes under investigation - to provide an audit trail to law enforcement agencies.

LAW ENFORCEMENT AND SUPERVISORY AUTHORITIES

In accordance with relevant provisions of the former Law of 1996, the Government of the Republic of Cyprus established its financial intelligence unit, under the name of Unit for Combating Money Laundering (MOKAS), which became operational in January 1997.

The Unit is comprised of representatives from the Attorney General’s Office, the Customs and Excise Department and the Police, and is headed by a senior official of the Attorney General’s Office.

The Law provides for the mandatory reporting of suspicious transactions to MOKAS by all persons and professionals who are engaged in financial and non-financial businesses, including lawyers and accountants. The Unit may apply to the Court and obtain freezing, confiscation and disclosure orders. It is pointed out that with the disclosure orders, bank secrecy can be lifted.

Furthermore, the Unit is also engaged in policy issues in the area of anti-money laundering measures, as well as in various awareness raising and training activities on the subject, involving both the public and private sectors.

The Law also provides for the establishment of an Advisory Authority Against Money Laundering. This Authority was established by the Council of Ministers on 7 November 1997. It consists of representatives of a wide spectrum of public and private bodies and is presided by the Permanent Secretary of the Ministry of Justice and Public Order. Its main tasks are to inform the Council of Ministers of any measure taken and the general policy against money laundering and terrorist financing and to advise on any necessary additional measures.

Concerning preventive measures in the financial sector, the law designates the Central Bank of Cyprus as the competent supervisory authority for banks and money transfer businesses, the Securities and Exchange Commission with regard to investment firms ; the Superintendent of Cooperative Societies and Cooperative Development for the cooperative credit societies; the Superintendent of Insurance for insurance companies; the Cyprus Bar Association for lawyers, the Institute of Certified Public Accountants for accountants and auditors and MOKAS for real estate agents and dealers in precious metals and stones

All supervisory authorities have issued legally binding directives to persons falling under their responsibility prescribing the measures which need to be taken for achieving compliance with the law.

INTERNATIONAL COOPERATION

The Government of the Republic of Cyprus fully supports and promotes international cooperation, at all levels, for the fight against money laundering and terrorist financing..

In this context, we note the following initiatives in the field of international cooperation:

The MOKAS cooperates with foreign counterpart Units and can exchange information with any type of FIU (judicial, police, administrative). It has, for example, signed Memoranda of Understanding with a number of FIUs. It should be pointed out, however, that there is a specific provision in the Law, which enables the MOKAS to cooperate with other FIUs even without a Memorandum of Understanding.

The MOKAS is also a member of the “Egmont Group” and participates actively with representatives in the meetings of its working groups.

Cyprus is a member of the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures (known as MONEYVAL), an FATF styled regional body, and representatives from the MOKAS and the Central Bank participate in its meetings. The Head of MOKAS was elected in December 2008 as a Vice-Chair of this Committee.

The MONEYVAL assessed three time the Cyprus’s anti-money laundering system in April, 1998, September, 2001 and April 2005. All subsequent evaluation reports concluded that Cyprus has implemented in a generally sound and comprehensive manner measures against money laundering and terrorist financing in line with international standards and has put in place a very comprehensive legal framework to that effect.

The latest report assessed and rated Cyprus, with very good results, for its level of compliance against the 49 Recommendations of the Financial Action Task Force against money laundering and terrorist financing.



Source: Ministry of Foreign Affairs
Last update: August 2010


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