The problem of money laundering is an international one and must be resolved through international assistance and cooperation by all countries. Cyprus has recognized this and developed a comprehensive legal and procedural frame for addressing this issue.

Legislative Framework and Regulatory Institutions

Cyprus has signed the UN Convention against Transitional Organised Crime and its two protocols, the UN Convention for the Suppression of the Financing of terrorism and the Council of Europe Convention on laundering, search, seizure and confiscation of the proceeds from crime (Strasbourg Convention).

In relation to the national law in May 1996 the republic of Cyprus enacted The Prevention and Suppression of Money Laundering Activities Law (No. 61(I)/96) amended by laws since from 1997 – 2004).

The Cypriot Legislation is in line with the U.N. Convention, The Council of Europe Convention, EU Directives, 40 Recommendations of the FATF, 8 Special Recommendations of the FATF.

The law criminalises money laundering from all serious crimes and also codifies actions that Banks and non bank financial institutions must take, including customer identification.

Amendments of the law extended the list of predicate offences to include crimes punishable and facilitating the exchange of financial information between Cyprus\’ Financial intelligence Unit (FIU) with other FIUs, as well sharing of information with other governments.

Cypriot law and regulations restrict on foreign ownership of property and transportation of currency and bullion. In addition it requires that all cash more than US$1,000 entering or leaving Cyprus must be declared. The Investigations Section of the Customs and Excise department is informed of all declarations over US$10,000. Banks and non-banks financial institutions ought to report suspicious transactions to the Unit for Combating money Laundering. Banks are required to report cash deposits in excess of US$10,000 to the Central Bank of Cyprus. Banks and financial institutions are instructed and to report to the Central bank of Cyprus cumulative electronic funds transfers that exceed of US$500,000 per month for a single customer.

The financial sector

The recognition of the important role of the financial sector for the effective prevention of money laundering activities and places additional administrative requirements on all institutions, including banks, Co-operative Credit and Saving Societies, Insurance companies, Investment firms, Money transmitters, Auditors/Accountants Lawyers, Estate Agents, Dealers in precious metals and stones, engaged in financial activities.

The law requires all persons engaged in relevant financial business to establish and maintain specific policies and procedures to guard against their business being used for the purposes of money laundering. It specifically requires all persons carrying out financial business to implement customer identification and record keeping procedures, appoint compliance officers and offer training to their employees. In Cyprus Commercial Banks open accounts for companies after establishing then identity of the natural person(s) who is/are the real ultimate beneficial owner. When opening accounts for trusts and nominees of third persons, Banks need to ascertain the identity of all settlers and the true beneficiaries of the accounts.

These procedures have been designed with two goals:

The strict implementation of the \”Know your customer\” principle in order to facilitate the recognition of suspicious transactions
Adequate records keeping procedures to enable a bank, if a customer comes under investigation.
Central Bank also issued a number of guidelines that:

Prohibit opening/maintaining secret, anonymous, numbered and fictitious accounts,
Require enhanced due diligence (EDD) for politically exposed persons and other high risk customers,
Require identification of beneficial shareholders,
Forbid correspondent banking relationship with shell banks.
Money laundering is at the \”placement stage\” and is diminished in Cyprus by virtue of four reasons:

the existence of the Capital Movement Law as from 1.5.2004
the limited role of cash operations in the Cyprus economy
no bureaux de change
no casinos
The government of Cyprus supports and promotes cooperation at all levels for the fight against the money laundering. The Cypriot F.I.U is a member of Egmont Group, member of the Council of Europe Committee on the Evaluation of Anti-money laundering measures. The Cypriot F.I.U has excellent cooperation with National Intelligence Service of the U.K and the financial Crime Enforcement network of the US. A report by the Financial Action Task Force on Money Laundering (FATF) has verified that Cyprus is a cooperative country against money laundering as well has a comprehensive anti-money laundering system.