Cyprus

1. Does Cyprus have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?

Yes. Cyprus’ AML legislation the Prevention and Suppression of Money Laundering Activities Law 2007 (188(I)/2007) as amended from time to time (the “Cyprus AML Law” or the “Law”) transposed the EU’s Fourth AML Directive (Directive 2015/849) through the Law 13(I)/2018. Further amendments were introduced through the adoption of the Fifth AML Directive (2018/843) into the Cyprus AML Law.

2. To whom does the legislation apply?

The Law applies to all “Obliged Entities” as defined in the Law which includes a number of credit institutions, financial organisations and professional bodies, whose profession or business encompass a high risk of being involved in money laundering offences, such as banking institutions, cooperative societies, investment firms, stockbroking firms, accountants, insurance companies, real estate agents (for rents exceeding EUR 10,000), advocates, trust and company service providers, money transfer services and dealers in precious metals and precious stones as well as casinos, crypto-asset service providers, traders or art dealers whose dealings exceed EUR 10,000.

3. What does the legislation prohibit?

The Law applies to money laundering offences and predicate offenses. Predicate offences are all offenses defined as criminal pursuant to the laws of the Republic of Cyprus.

Cyprus’ AML Law prohibits the laundering of proceeds arising from predicate offenses, including terrorist financing and related activities. The Law makes money laundering or assisting in it a criminal offence.

The Law also prohibits a person – in the course of a financial business – from forming a business relationship, or carrying out a one-off transaction with or on behalf of another, without applying the prescribed procedures with regard to identification, record-keeping and internal reporting as set out in the Law.

4. How is money laundering defined? Does underlying criminal activity have to be proven?

Base on the case law (Criminal Appeal 298/2018, Theofanous vs Police, published on 27.6.2019) the offense of money laundering, as it identifies itself, consists in the use or enjoyment by the offender of the winnings of his illegal actions.

The main purpose of the Law is to determine and criminalize the money laundering that came from all criminal offenses and to provide for the seizure and confiscation of the proceeds. The main provisions of the Law are contained in the following articles:

• Specific Offences (article 3 of the Law)
• Offenses of money laundering (article 4 of the Law)
• Predicate offenses (article 5 of the Law)
• Failure to Report (Article 27 of the Law)
• Tipping-off (article 48 of the Law)

The underlying criminal activity needs to be proven.

5. What level of intent or knowledge is required to establish a violation?

Any person who knows or ought to have known that any form of asset that constitutes proceeds of illicit activities carries out any of the actions stipulated below is liable of committing an offense punishable by imprisonment or by the imposition a substantial fine (see question 6).

Individuals

Such knowledge extends to when a person knowing (or ought to have known) that another person(s) converts, transfers, or moves such assets for the purpose of concealing or disguise their illicit origin or assisting a person who is involved in the commission of predicate offence to conduct such activities as above. It may also involve the knowledge of the ways the other person is attempting to evade the legal consequences of their actions, but also their attempts in the concealment or disguise of the true nature, source, location, disposition, movement, rights in respect of the assets or ownership in the asset, even though knowing that such property is derived from criminal activity.

A person will also be criminally liable if they know or ought to have known in regards to the acquisition, possession or use of such assets deriving from criminal activity or from an act of participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the actions referred to in the aforementioned. Additionally, liability falls to any person who provides information on investigations into money laundering in order to enable a person who has benefited from the commission of an offense to retain the proceeds or control of the proceeds of the offense in question.

Corporate Entities

A legal entity can be found liable for committing any of the above-mentioned offences, which is committed for the benefit of any person who is acting alone or on behalf of the legal entity occupying an executive position, as a representative, decision-maker or a controlling party, in the legal entity. Additionally, a person in an executive position failing to supervise or exercise control to enabling the commission of an offence for the benefit of the legal entity who the person happens to be managing may also be found liable.

6. What are the potential penalties for infringing the legislation?

• Any person committing an offence knowingly under the Cyprus AML Law may be liable for a fourteen-year imprisonment and/or a fine in the sum of EUR 500,000.
• If an offence is committed and a person if found liable that they ought to have known that the above actions enabled the commission of the said offence, the person may by liable for a five-year imprisonment and/or a fine in the sum of EUR 50,000.
• Corporate entities found guilty for money laundering be to subject to:

1. exclusion from public benefits or aid;
2. temporary or permanent exclusion from access to public funding, including tenders, grants and allowances;
3. temporary or permanent ban on commercial activity;
4. liquidation order; and,
5. temporary or permanent closure of the premises used to commit the offense.

7. Does the legislation have extra-territorial reach?

Yes. Regardless as to whether the criminal offence(s) fall within the jurisdiction of the Cypriot Courts, a party which is found to have been involved in the commission of a criminal activity under the Law (as stated in question 5) will be subject to the Cyprus AML Law penalties.

8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?

On 12 March 2021, the Registrar of Companies and the Official Receiver (“RoC”) issued a directive (Κ.Δ.Π. 112/2021) providing guidance on the UBO register for legal entities in the Republic of Cyprus.

Based on the Directive, UBOs will have to be registered in separate public held register – UBO register – depending as to whether the individual is a UBO of a (i) corporate entity, (ii) a trust, or (iii) foundations and other.

Reporting to the financial intelligence unit for combating money laundering (“MOKAS”)

Organisations that carry out “relevant financial business” (the “Organisations”), which is widely defined and includes all banking, money transmission and investment activities, are required to take adequate steps to prevent their services being misused for money laundering purposes.

The Organisations’ employees must promptly report any knowledge or suspicion of money laundering to the police or to MOKAS. The Law requires any person who, in the course of his trade, profession, business or employment, acquires knowledge or reasonable suspicion that another person is engaged in money laundering, to report his knowledge or suspicion as soon as is reasonably practical under section 69 of the Cyprus AML Law.

After the initial disclosure, relevant Organisations are expected to follow any instructions that MOKAS gives, particularly as to whether or not to execute or suspend a transaction. By extension, the Law protects the reporting party from any liability under a contractual breach or other obligation is attached to a bank that refrains from, or delays, executing a customer’s order on instructions from MOKAS.

In addition to ad hoc reporting of suspicious transactions, all Cypriot Banks are required to submit a monthly report to the Central Bank of Cyprus of amounts exceeding EUR 10,000 or its equivalent, which their customers deposit in cash, and of incoming and outgoing funds transfers in excess of EUR 500,000 or its equivalent.

9. What are the potential penalties for failing to comply with these obligations?

A person who refuses, fails or neglects to properly undertake their reporting obligations for the UBOs of companies and other legal entities will be subject to a charge of EUR 200 and a further charge of EUR 100 on a daily basis of the continuation of the violation. There is a maximum charge of EUR 20,000.

An offense of providing false or misleading data or information for the purposes of disclosure in the UBO Registers may lead to imprisonment not exceeding the 2 years or in a fine that does not exceed one EUR 100,000 or in both of these penalties.

Any person who prejudices the investigation of money laundering offences by “tipping off”, that is making a disclosure, either to the person who is the subject of a suspicion or to a third party, knowing or suspecting that the authorities are carrying out such an investigation, is guilty of an offence under section 48 of the Law. The person failing to comply with section 69 of the Law may be liable for an imprisonment not exceeding 2 years or to a fine not exceeding EUR 50,000 or in both these two sentences.

10. Who are the relevant enforcement authorities in Cyprus and what are their contact details?

MOKAS is a government agency within the Attorney General’s department and is composed of governmental lawyers from the Attorney General’s office, police officers and customs officers.

MOKAS is responsible for analysing and investigating information related to suspected money laundering activities that the institutions provide subject to the Law, and, for facilitating the prosecution of offences under the Law. It is also responsible for conducting inquiries into any suspicion in relation to the financing of terrorism. In connection with its investigations it has the power to apply to the court for freezing orders, confiscation orders and disclosure orders which lift bank secrecy. The Law provides for mandatory reporting of suspicious transactions to MOKAS.

Unit for Combating Money Laundering

P. O. Box 23768, 1686 Nicosia

T: +357 224 460 18

F: +357 223 170 63

mokas@mokas.law.gov.cy