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Cyprus- Key Developments In The Prevention And Suppression Of Money Laundering and Terrorist

The Cyprus House of Representatives on 18 February 2021 has enacted the amending law to the Prevention and Suppression of Money Laundering and Terrorist Financing Law 188(I)/2007 (“the AML Law”), therefore fully implementing EU Directive 2018/843 of the European Parliament and of the Council of 30 May 2018. Below are some of the key changes effected by the amending law.

    The obliged entities that will need to strictly follow the AML Law provisions, have been expanded and additionally include the following:

    1. Cryptoasset Service Providers
      Service providers dealing with exchanges between cryptoassets or exchanges between cryptoassets and fiat currencies or offering wallet custodian and other financial services for cryptoassets as these are identified in the new law, have been included now among the obliged entities who are regulated and are subject to the AML Law.

    2. Art Dealers and Warehouses providing storage services for works of art
      Art Dealers and Warehouse providers of storage services for works of art are included within the obliged entities in case that (a) persons are trading or acting as intermediaries in the trade of works of art if the value of the transaction or a series of linked transactions of an amount of EUR 10.000 or more and (b) persons that own or operate warehouses providing storage services for works of art if the value of the transaction or a series of linked transactions of an amount of EUR 10.000 or more.

    3. Tax advisers
      These are persons whose principal business or professional activity is, directly or through other persons related to them, to provide material aid, assistance or advice in the field of taxation. The amendment has expanded the notion of tax advisers, as it was already included in the previous law.

    4. Real estate agents
      The real estate agents are now also required to comply with the AML Law when acting as intermediaries in the rental of real estate, but only in respect of transactions for which the monthly rent is EUR 10.000 or more.

    5. Persons trading in goods or provision of services
      Persons trading in goods or provide services are considered as obliged entities and are subject to the provisions of the new enacted law once the payment of the transaction is made in cash and is EUR 10.000 or more.

    The following Beneficial Ownership Registers are set up giving access, under certain conditions, to the public.

    The registers to be set up are:

    1. The Companies’ Register kept with the Registrar of Companies. This register will become open to the public at a certain point and relevant information, as provided in by the new enacted law, will be available.
    2. The Trusts and Similar Legal Arrangements Register kept with the Cyprus Securities and Exchange Commission (“CySEC”). This register will not be open to the public but it may be accessible to those who can prove their legitimate interest so that the relevant information is disclosed to them.
    3. The Register of legal bodies, other than those registered with the Registrar of Companies, such as, clubs, foundations, federations, and unions. This register will be kept with the General Commissioner. This register will be open to the public and relevant information, as provided in by the new enacted law, will be available.

    A register of the cryptoasset service providers will be created. This register will be kept by CySEC and will be open to the public. A cryptoasset service provider of in order to be included within the register must file the required application and meet CySEC’s requirements.
    An electronic registry of bank accounts, payment accounts and safe boxes, will be established and kept by the Central Bank and relevant information will be stored in the registry as to the owners and users of bank accounts opened in banking institutions whereby the identification and verification of the identity of clients is now also explicitly allowed by means of an electronic identification process through the registry which will be established.
    An obliged entity may not follow due diligence procedures and identification processes for its clients’ identity verification in relation to electronic money transactions, such as payments through cards, provided, the payment instruments are not reloadable, or can only be used for the execution of payments for which a maximum monthly limit of EUR 150 applies, and the maximum amount stored electronically remains below EUR 150. The threshold was EUR 250 and reduced to EUR 150.Moreover, the exemption from customer identification and identity verification now applies for redemption or cash withdrawal of the monetary value of the electronic money up to EUR 50 or in the case of remote (online) payment transactions. The threshold used to be EUR 100.
    The European Commission has adopted a list of third countries with deficiencies in their anti-money laundering and counter-terrorism financing frameworks. Enhanced due diligence must be carried out upon dealing with or transacting with such high – risk third countries.
    A new provision of the new enacted law is that, politically exposed persons must be identified also through certain public functions. EU Member States are required now to draw up a list of the exact functions that qualify as apparent public functions for the purpose of identifying a person as PEP. Member States should also require international organizations located in their jurisdiction to prepare and update such list. These lists must then be shared with the European Commission, which will make them publicly available.
    The new enacted law further enhances the exchange of information and cooperation between anti-money laundering supervisors and financial supervisory authorities including with the European Central Bank.