CYPRUS Law and Practice Contributed by: Marcos Georgiades, Dominique Pelides and Panayiota Elia, Georgiades & Pelides
Senior management is responsible for the fol - lowing, among other matters: • managing and overseeing the day-to-day operations of the bank; • providing the management body with recom - mendations on business objectives, strate - gies, business plans and major policies that govern the operation of the management body, for its review and approval; and • providing the management body with com - prehensive, relevant and up-to-date infor - mation that will enable it to review business objectives, business strategy and policies, and to hold senior management accountable for its performance. 4.3 Remuneration Requirements The Governance Directives require every bank to have remuneration policies and practices (including in respect of the salaries and discre - tionary pension benefits of, among others, sen - ior managers, staff engaged in internal controls and risk takers) that are consistent with, and promote, sound and effective risk management, and are gender neutral. The rules on remuneration policies include the following: • Taking into account the national criteria on wage setting, the remuneration policy must distinguish between (i) basic fixed remunera - tion, which should reflect relevant profession - al experience and management responsibility as set out in an employee’s job description, and (ii) variable remuneration, which should reflect a sustainable and risk-adjusted per - formance as well as performance in excess of that required to fulfil the employee’s job description.
• The total variable remuneration must not limit the ability of the bank to strengthen its capital base. • Banks must set appropriate ratios between the fixed and variable components of the total remuneration, applying the principles set out in the Governance Directives. • Guaranteed variable remuneration is excep - tional, is given only when hiring new staff (provided the bank has a sound and strong capital base) and is limited to the first year of employment. • Payments relating to the early termination of a contract should reflect performance achieved over time and should not reward failure or misconduct. A breach of the provisions of the Governance Directives may lead to the imposition of admin - istrative sanctions and measures by the CBC. It is also a criminal offence punishable with a fine and/or imprisonment.
5. AML/KYC 5.1 AML and CFT Requirements Legislation
The main piece of legislation dealing with the prevention of money laundering and terror - ist financing is the Law on the Prevention and Suppression of the Legalisation of Proceeds from Illegal Activities, Law No 188(I)/2007 (as amended) (the “AML Law”). As the superviso - ry authority for banks under the AML Law, the CBC has issued the directive on the prevention of money laundering and terrorist financing (the “AML Directive”).
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