CYPRUS Law and Practice Contributed by: Marcos Georgiades, Dominique Pelides and Panayiota Elia, Georgiades & Pelides
Procedures to Prevent Money Laundering and Terrorist Financing Article 58 of the AML Law requires banks (among other persons) to implement adequate and appropriate policies, controls and procedures, proportionate to their nature and size, in order to mitigate and manage effectively the risks related to money laundering and terrorist financing, in connection with the following: • client identification and due diligence; • record-keeping in relation to clients’ identity and their transactions; • internal reporting to the compliance officer (a senior staff member appointed by the bank to whom any information or other matter that proves or creates suspicion that a client is engaged in money laundering or terrorist financing activities should be reported) and reporting to the Unit for Combating Money Laundering; • internal control, assessment and manage - ment of risk in order to prevent money laun - dering and terrorist financing; • the thorough investigation of every transac - tion that, because of its nature, is considered particularly susceptible to being connected with offences related to money laundering or terrorist financing, especially complicated or unusually large transactions and all unusual transactions that are executed without an obvious financial or legitimate purpose; • briefing and regular training of staff; • risk management practices; • compliance management; and • recruitment and assessment of employees’ integrity. The AML Law requires banks to appoint a mem - ber of the board of directors to be responsible for the implementation of the provisions of the AML Law, any directives, circulars and regula -
tions issued under the AML Law and any rel - evant acts of the European Union. The AML Law also requires the establishment, in certain cases, of an independent internal audit function, which will be responsible for verifying that the bank implements the policies, controls and proce - dures required under the AML Law. Supervisory Authority As the supervisory authority for banks under the AML Law, the CBC evaluates and supervises the implementation by banks of the provisions of the AML Law and directives issued by the CBC under the AML Law. If a bank fails to comply with the provisions of the AML Law, the provisions of any directive issued by the CBC under the AML Law or the provisions of Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 on information accom - panying transfers of funds and repealing Regula - tion (EC) No 1781/2006, the CBC may take any or all of the measures set out in the AML Law, which include the following: • requiring the bank to take such measures within such time period as the CBC shall specify to remedy the situation; • imposing administrative fines; and • amending, suspending or cancelling the bank’s licence. 6. Depositor Protection 6.1 Deposit Guarantee Scheme (DGS) The DGS was established and has been oper - ating in Cyprus since 2000. The relevant legal framework consists of the Banking Law and the Guarantee of Deposits and Resolution of Credit and Other Institutions Law of 2016, Law No 5(I)/2016 (as amended) and regulations issued thereunder. The DGS constitutes a separate
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