Cyprus Regulator Targets Inadequate AML Reporting, Threatens Consequences
The Cyprus Securities and Exchange Commission (CySEC) has released a circular highlighting the need for improved anti-money laundering and counter-terrorist financing (AML/CFT) reporting in regulated entities. The circular specifically addresses areas where compliance officers’ annual reports and internal audit reports have shown weaknesses. The regulator notes that the reports often lack specific details on identified deficiencies in AML measures, and calls for more comprehensive information on high-risk customers and ongoing account monitoring systems. CySEC also emphasizes the importance of clear documentation on compliance officer training programs and department structure.
This is not the first time CySEC has raised concerns about AML reporting, with a similar assessment conducted over three years ago. Despite previous actions taken by the regulator, the desired outcome has not been achieved. As a result, CySEC warns that recurring weaknesses will undergo stringent compliance checks and emphasizes the potential administrative sanctions that entities may face for non-compliance. In the past, CySEC has imposed fines on firms for breaches related to AML/CFT regulations, such as Fintailor Investments and Freedom Finance. However, the most recent penalty was not related to AML/CFT, but rather to offering excessively high financial leverage.
CySEC’s crackdown on sloppy AML reporting serves as a reminder to regulated entities of the importance of compliance and the potential consequences for non-compliance. The regulator’s efforts aim to ensure that financial institutions in Cyprus maintain robust defenses against money laundering and terrorist financing.