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CySEC Warns Non-AML Compliant Cyprus Investment Firms

27 October, 2023

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Cyprus Securities and Exchange Commission (CySEC) alerted the non-compliant  AML firms, stressed board members to obligate their duties, and uphold international standards.

CySEC reminds the board members and investment firms of the regulatory policies and their vital role in the country’s financial growth. They threaten non-compliant firms to face hefty fines and sanctions if they do not respond promptly and enhance their AML compliance system. According to the commission announcement, CySEC stated investment firms should “enhance their performance and promote a culture of integrity and high ethical standards” because the last supervision review of investing firms disclosed various loopholes in the compliance system. The commission issued this warning to alert the investing firms because from now onward, there would be no tolerance for non-compliance in financial institutes. CySEC chairman, George Theocharides, stressed compliance with the legal framework in investing organizations, “Cyprus is open for business, but only to the ones that take into consideration the best interest of their clients by fulfilling at all times their regulatory requirements. This is the basis for a healthy, strong market, with new products and services deploying financial technology and innovation.”

The chairman also emphasized that they will arrange meetings and workshops for investment firms and small businesses to guide them about international standards. It will also highlight the importance of company verification and investor protection. CySEC also outlines rigid regulations as well as the European Securities and Markets Authority (ESMA) to follow the steps of the international regulatory authority, the Financial Action Task Force (FATF). It will strengthen cross-border retail financial service providers. Investment firms and other financial institutes should prepare for the rigid regulations that are on the way. Organizations that are adequately complying and utilizing robust AML measures will survive the strict non-compliance penalties. 

Theocharides also explained that “CySEC takes any misconduct by supervised entities seriously and firmly believes that through intense supervision and continuous monitoring, investors’ protection and market integrity will be enhanced.” He also stated that international retail businesses, primarily those that deal in high-risk products, are continuously vulnerable to the country’s financial ecosystem. 

For violations of the Financial Services and Activities and Regulated Markets Law of 2017, CySEC has fined CIFs a total of €5.3 million over the previous three years, including a €1 million penalty against a sole company. According to the chairman, Cyprus is an open market for all those businesses that comply with rigid regulations, secure KYB measures, and bolster the market. CySEC is also investing in human resources and technology to enhance the strength of its supervisory structure to effectively and efficiently monitor the regulatory framework of investment firms. The commission underlined in a warning statement, “CySEC has also moved to reject applications for acquiring a CIF license, withdraw licenses, and suspended licenses until specific actions were taken to remediate weaknesses or omissions identified during supervisory checks.”

Suggested Reads: 

FinCEN Intends to Utilize Digital Streaming Platforms to Spread Beneficial Ownership Reporting Measures

UK Law Society Ensures Solicitors Complying With AML Measures

European Union Introduces MiCA Laws to Regulate Opaque Crypto Firms

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