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CySEC Identifies Common Weak Spots in Cyprus’ Fight Against Money Laundering Prevention

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The Cyprus Securities and Exchange Commission (CySEC) has identified areas of common weakness among regulated entities on the island in regards to tackling money laundering for the period 2016-2017.

The information is based on CySec’s onsite inspections of these regulated entities during the specific timeframe.

During its visits, CySec assessed the regulated entities’ compliance with the Prevention and Suppression of Money Laundering and Terrorist Financing Law, and the Directive DI144-2007-08 on the Prevention of Money Laundering and Terrorist Financing.

Whilst the inspections found that significant progress and improvement had been made in the internal procedures and measures applied by regulated entities to prevent money laundering and terrorist financing - in compliance with the Law and Directive - there were several areas of ‘common and reoccurring weakness and/or deficiencies.

CySEC has now called upon all regulated entities to duly consider and immediately implement corrective measures in the below areas to ensure that their practises fully comply with the Law and the Directive in place to prevent money laundering and terrorist financing, and reminds them that in the event of non-compliance, they will be subject to the administrative sanctions available to - and enforced - by CySEC under the Law.

Best Practise Standards

Introduce and adopt policies for not accepting cash as a form of payment.

Return deposited funds to customers in the same name of the customer, and by way of the same bank account from which they originated.

Apply automated electronic systems for identifying customers and conducting ongoing customer due diligence, and the monitoring of customer transactions.

Employing dedicated personnel to implement practices, measures, procedures and controls related to the prevention of money laundering and terrorist financing.

Ensure that personnel is trained and educated in their knowledge of anti-money laundering and counter financing of terrorism processes and controls, with increased training where required.

Customer Due Diligence

Improve measures to verify sources of customer wealth and funds through a risk-based approach.

Improve processes of obtaining and assessing information about customers or beneficial owners’ backgrounds.

Establish policies to ensure that customer information and data is collected within the right timeframes, and based on the customer’s risk categorisation, and that they should regularly update a separate form (printed or electronic) containing customer data.

Improve the application of enhanced due diligence measures.

Timing of Verification of the Customers’ Identification

Ensure the requirements of Circular C157 are fully met, which states a maximum amount of deposited funds limited at €2,000, and a maximum 15-day timeframe to complete the customer’s identity verification process. The regulated entity is obliged to terminate the business relationship and return deposited funds to the customer to the bank account of origin immediately in the event that verification within this timeframe fails.

Termination of the Business Relationship with Customers

Ensure that the risk management and procedures manual is regulated for proper recording of the termination of a business relationship.

Ongoing Monitoring of Customers’ Accounts and Transactions

Ensure that accurate information is provided for the methods employed to monitor account transactions for unusual behaviour.

Implement better methods in screening customers on the International Sanctions adopted by the UN Security Council and the Restrictive Measures adopted by the Council of the EU.

Internal Suspicious Reporting and Reporting to MOKAS

Ensure that adequate and appropriate measures are in place to implement internal suspicions reporting by the Compliance Officer, and their reporting to MOKAS.