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Cyprus' AML Evaluation: Key Points From the Us State Department Report

March 19, 2020

According to a recent report published by the US State Department’s Anti-Money Laundering (AML) unit, Cyprus continues to upgrade its established AML legal framework, while authorities successfully 26 individuals and entities for money laundering related offences in 2018.

The Decline in Active Cyprus Companies can be Attributed to Stricter Regulations

As Cyprus is a central base and an international financial services hub, and as such the island is home to a high percentage of nonresident businesses and companies. However, the total number of active companies has declined from 273,168 in 2013 to 217,240 at the end of the 2018 financial year. This can be attributed to the the Cyprus Registrar of Companies and authorities making continued and valid efforts with regards to enforcement with incorporation rules, and the mandatory annual submission of accounting records.

As per the report: “By law, all companies registered in Cyprus must disclose their ultimate beneficial owners to authorities.” Also, experts have commented that  in spite of the liquidation of operations from older companies contributing to such decline, at least 11,000 new companies have been incorporated every financial year since 2013.

Gambling and the gaming sector in Cyprus

In 2018, shortly after gambling was legalised, Cyprus awarded a multi-year, exclusive casino license to Hong Kong-based Melco International and ever since, Melco is building a multi-million-euro casino resort expected to open in 2021.

The US State Department’s Anti-Money Laundering (AML) Unit expressed their concerns in the laundering methodologies and vulnerabilities, especially in the gaming sector and in the citizenship by investment plan.

Regarding the gaming sector, Cyprus authorities are just beginning to develop the capacity to supervise casino-based activity. They have established a gaming authority who is working with international gaming consultants to conduct due diligence on clients, to train staff, and to establish processes to identify and report illicit activity.

Another emerging concern is the rise of virtual banking and use of virtual currency on the island. We wrote an article on the preliminary measures taken by the government in response to the growing use of e-wallets and cryptocurrency. Click here to read it.

The Cyprus Citizenship-by-investment Programme

The citizenship by investment plan, The Republics citizenship-by-investment (CBI) program allows foreign investors to apply for Cypriot (and consequently EU citizenship) after investing more than $2.2 million in any of the following areas: business, infrastructure, or development, (subject to several conditions). Read more about the programme in depth.

According to the report, “the Cyprus investment programme generated investment in the Republic, and stimulated the property market, earning $7.3 billion between the financial years 2013 to 2018 from the programme alone. Before 2018, eligibility requirements were not as rigorous and due diligence checks were more relaxed with the research conducted. Following pressure from the EU and United States, Cyprus and the Registrar of Companies have tightened eligibility criteria and applicant monitoring over 2018 and 2019.

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