Anti-money laundering (AML) and counter-terrorist financing (CTF) compliance is a reality for most businesses around the globe. As a European Union (EU) Member State, the Republic of Cyprus has transposed the applicable EU Directives into its national legal order, with the Law for the Prevention and Suppression of Money Laundering Activities of 2007 (L.188(I)/2007), as amended, being the key piece of the legislative framework governing AML and CTF compliance.
Notably, the aforesaid Law was amended in 2021 by transposing the provisions of the Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU (commonly referred to as the 5th AML Directive).
The most prominent features of the 5th AML Directive are, first, the requirement for EU Member States to establish and maintain an ultimate beneficial owner (UBO) register and, second, bringing cryptocurrencies and cryptocurrency exchanges under the scope of the existing AML/CTF regulations.
While the transposition of Directive (EU) 2018/1673 of the European Parliament and of the Council of 23 October 2018 on combating money laundering by criminal law (commonly referred to as the 6th AML Directive) is just around the corner, it is important to note its main feature is the unified list of predicate offences in Article 2 which includes, amongst others, cybercrime, environmental crime, tax crime, trafficking in human beings and migrant smuggling.
The Law 188(I)/2007, as amended, relates to both anti-money laundering and combatting terrorist financing measures. The aforesaid Law imposes an obligation on the persons (legal or physical) that fall within the scope of the Law to know their client and carry out their due diligence (regular or enhanced due diligence for high-risk clients), which includes measures: