CYPRUS Law and Practice Contributed by: Angelina Fitoz, Svetlana Remezova, Darya Averyanova and Sude Dogan, Lawitt Buro
5. Payment Processors 5.1 Payment Processors’ Use of Payment Rails In Cyprus, payment processors are not limited to existing rails. The regime is technology-neutral, pro - vided compliance with the Payment Services Law of 2018 is ensured. Existing Rails in Practice Most processors use Single Euro Payments Area (SEPA) credit transfers, instant payments and card networks, which provide settlement certainty and regulatory clarity. Alternative and Proprietary Rails Processors may develop account-to-account, closed- loop or DLT-based systems. If a structure qualifies as a payment system, additional oversight applies. The focus is on integrity, fair access and stability. Regulatory Requirements New rails must: • ensure objective and non-discriminatory access; • comply with DORA ICT resilience and incident reporting rules; and • align with CBC expectations on interoperability, particularly with SEPA Instant. 5.2 Regulation of Cross-Border Payments and Remittances Cross-border payments in Cyprus are governed by EU law (PSD2 framework and directly applicable Regula - tions) and focus on speed, transparency and financial Payment institutions and EMIs operate under the Pay - ment Services Law. EU rules require equal fees for domestic and cross-border euro transfers, and instant payment regulation has made near real-time settle - ment standard across the Eurozone. AML and Sanctions crime prevention. Core Framework Providers must comply with the AML Law and CBC directives. For crypto transfers, the EU Travel Rule requires originator and beneficiary data to accompany
Bank, including capital and liquidity rules. Non-bank fintechs cannot accept deposits. Peer-to-Peer and Crowdfunding P2P platforms must be authorised by CySEC under the law implementing Regulation (EU) 2020/1503 and act as intermediaries between investors and borrow - ers. Own Capital Many online lenders use equity, private funding or bond issuances under Companies Law and prospec - tus rules where applicable. Securitisation Banks and larger lenders may transfer loan portfolios to special purpose vehicles under the Securitisation Law and EU framework. Credit Acquisition Non-bank buyers of loan portfolios must appoint a Central Bank-authorised Credit Servicer to manage borrowers and ensure compliance with consumer and AML rules. 4.4 Syndication of Fiat Currency Loans Structure of Syndication Syndicated loans are common for large real estate and project finance deals. A lead arranger structures the transaction, participating lenders share the risk, and an agent manages administration and security. Foreign law may govern the finance documents, but security over Cypriot assets must follow local law. Regulatory Framework Syndications follow the same rules as bilateral loans, with added responsibilities: • each lender must perform its own credit assess - ment; • each lender remains individually responsible for AML/KYC compliance; and • if crypto-assets or fintech payment channels are used, Travel Rule obligations apply where relevant.
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