The Cyprus House of Representatives on the 18th February 2021 has enacted the long-awaited amending law to the Prevention and Suppression of Money laundering and Terrorist Financing Law 188(I)/2007 thus fully implementing EU Directive 2018/843 of the European Parliament and of the Council of 30 May 2018, (“the 5th AML Directive”).
This new enactment, (“the new Law”), implements the provisions of the 5th AML Directive that were not already implemented so far into Cyprus Law. With this new Law, the 5th AML Directive is now fully implemented in Cyprus.
The key amendments brought forward by the New Law are the following:
- Extending the Scope
The 5AMLD extends AML/CFT obligations to new assets being managed such as:
- Virtual Currencies: increasing the scrutiny on virtual currencies and extending the scope of AML/CTF controls in the 4MLD to virtual currency providers, to notably prevent anonymity. Anonymous safe deposit boxes will also no longer be allowed.
- Art Traders: When dealing with high-value artwork that results in a transaction of €10,000 or more, art traders will have to report suspicious activity and perform checks on customers when necessary
2. Beneficial Ownership Registers
The following Beneficial Ownership Registers are set up granting access, under certain conditions, to the public. The EU companies have the obligation to have available the information as to their Beneficial Owners and record it accordingly in the relevant register.
The registers to be set up are:
a. The Companies’ Register kept with the Registrar of companies. This register will be open to the public and relevant information, as identified in the Law will available.
b. The Express Trusts and Similar Legal Arrangements Register kept with CySEC. This register will NOT be opened to the public but it may be accessible to those of the public who can prove their legitimate interest so that the relevant information is disclosed to them. Relevant procedure will be laid down.
c. 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 identified in the Law, will be available.
3. Creation of the Service Providers of Cryptoassets register
A service providers’ of cryptoassets register will be created. This register will be kept by CySEC and will be open to the public. A service provider of cryptoassets to be included must file the relevant application and meet the conditions set down by CySEC.
4. Creation of Electronic Registry of Bank Accounts, Payment Accounts and Safe Boxes
The New Law provides for the creation of a central electronic registry which will allow the timely identification of any natural or legal person holding or controlling bank or savings accounts and safe deposit boxes. This information will be directly accessible by the Police and by MOKAS as well as by the Customs and Excise Department and by the Tax Authorities.
The Central Bank will be responsible for the creation of the Register and its operation.5. Electronic Money Payments
The New Law lowers the threshold for identifying holders of prepaid cards from 250 Euro to 150 Euro. The threshold for electronic money online transactions with prepaid cards is now lowered to a maximum of 50 Euro.
5. Enhanced Due Diligence for High-Risk Third Countries
The EU currently maintains a list of High-Risk third countries, and when doing business with clients within these countries, parties are required to undertake enhanced due diligence measures. One of the new updates that the 5AMLD brings, is that any client that is based in a High-Risk country is now subject to compulsory enhanced due diligence measures, of which the ‘relevant person’ must undertake. These include obtaining information on the source of funds, background checks and beneficial ownership to name just a few. Member States may also prevent firms from opening branches or subsidiaries in high-risk third countries and prevent the opening of a branch or subsidiary of a firm based in a high-risk third country.
This change aims to harmonise the rules concerning high-risk jurisdictions across the Member States. The EU hopes to ensure greater coordination and encouragement of firms to limit relationships with these countries.
6. Politically Exposed Persons (“PEPs”)
Under the New Law, Cyprus will be required to outline a list of offices and functions that qualify as politically exposed (PEP) on the national level and including nationally registered international organizations; the EU will draft a corresponding list on EU level, consolidate the national lists from member states and publish the result.
We’re here to help
The 5AMLD is now in force and firms are now required to take the appropriate steps to incorporate the additions to their compliance landscape, however, if there are any questions relating to the above, or on a wider scale, we are here to help.