EC Action Plan on AML
On December 4, 2018, the Council of the European Union affirmed the EC Action Plan on AML. The non-legislative short-term measures concern, inter allies, the following:
- the identification of the circumstances that contributed to the current money laundering cases in EU banks (Danske Bank, ABLV, ING and Deutsche Bank). Resulting in the ‘Report on the assessment of recent alleged money laundering cases involving EU credit institutions‘;
- a summary of important money laundering and terrorist financing risks and supervisory practices to address them. Resulting in the Supranational Risk Assesment;
- enhanced AML supervisory concentration;
- effective collaboration between prudential and money laundering supervisors. Resulting in the ‘Report Assessing the Framework for cooperation between Financial Intelligence Units’;
- criteria for the withdrawal of a bank’s authorization in case of serious breaches;
- increased supervision and exchange of information between relevant authorities;
- best practices and grounds for concentration among national authorities;
- improving European Supervisory Authorities’ capacity regarding existing powers and tools.
In accordance with the EC Action Plan on AML, it is more likely that we will be seeing the convergence of the national AML Supervisory authority from 9 to 1.
At the moment the Cypriot supervisory authorities are broken up to 9 authorities as per Section 59 of the Prevention and Suppression of Money Laundering and they are:
- Central Bank of Cyprus
- Cyprus Securities and Exchange Commission
- Cyprus Superintendent of Insurance
- The Board of the Institute of Certified Public Accountants Cyprus
- The Board of the Cyprus Barrister Association
- The Board of the Estate Agents in Cyprus
- National Betting Authority
- National Casino Authority
- The Department of Taxation
Which one of these will consolidate the supervision do you think, answer in the comments below.
Increased Attention to High-Risk Sectors
According to the supernational report prepared and published on the 24th of July 2019 by the European Commission, the committee of experts considers, analyses and categorizes 47 products and services vulnerable to money laundering and terrorist financing, they concern 11 sectors.
The report categorizes each from 1-4 with 1 being low significance and 4 being very significant. The following are category 4 sectors which I consider relevant for Cyprus:
- Investment in Real Estate
- Citizenship / Residency Program
Both of these sectors are, intertwined, and AML Regulations applicable only selectively. I believe in Q1 2020 with the introduction of the 5th AML directive we will also see increased obligations towards these two sectors.
The Cyprus AML landscape will be affected in the next 6-12 months and this will be driven by the European Union Action Plan.
UBO Register ECJ Decision
UBO Register has been ruled as invalid by the ECJ since it is against Article 7 & 8 of the EU Charter of Fundamental Rights.