Terrorism Financing (TF):
The law that provides for the combatting of terrorism financing is the Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007, as amended (the ‘
Law 188(I)/2007’). In accordance with the said Law, ‘terrorist financing’ is defined as the provision or gathering of funds by any means, directly or indirectly, with the intention to use such funds or knowing that they will be used in whole or in part for the commission of an offence within the meaning given to the term by section 4 of the
International Convention for the Suppression of the Financing of Terrorism (Ratification and Other Provisions) Law (only in Greek) and by sections 5 to 13 of the Combating of Terrorism Law, which was replaced by the Combating of Terrorism and Victims’ Protection Law of 2019 (the ‘
Law 75(I)/2019’, only in Greek). According to Article 58(d) of the Law 188(Ι)/2007, the regulated entities should apply adequate and appropriate policies, controls and procedures which are proportionate to their nature and size, so as to mitigate and manage the risks of money laundering and terrorist financing effectively, in relation to internal control, risk assessment and risk management in order to prevent money laundering and terrorist financing. Specifically, according to Article 58A of the Law 188(Ι)/2007, the regulated entities take appropriate steps to identify and assess the risks of money laundering and terrorist financing which they face, taking into account risk factors, including among others, factors which relate to their customers, countries and geographical areas, products, services, transactions or delivery channels for providing services, provided that such measures are proportionate to the nature and size of the regulated entity. Furthermore, Article 58(a) of the Law 188(Ι)/2007 provides the requirements for undertaking customer identification and due diligence, which among others, includes screening the customers and their transactions for the purpose of combatting of terrorism financing. Article 58(c) of the Law 188(Ι)/2007 provides for internal reporting and reporting to MOKAS in cases of suspicious transactions/activity on terrorism financing.
Additionally, the Law 75(I)/2019 deals with several issues, including the definition of terrorism felonies, the responsibilities of legal persons, responsibility of obliged entities under the Law 188(I)/2007 to confiscate property belonging to or controlled by persons engaged in terrorism and the responsibility of supervisory authorities for ensuring that obliged entities abide with the relevant provisions of the legislation.
The Directive of the Cyprus Securities and Exchange Commission (CySEC) for the Prevention and Suppression of Money Laundering and Terrorist Financing, as amended (the ‘
Directive’), includes examples of suspicious transactions/activities related to terrorist financing. Specifically, in Part B of the Third Appendix, examples of the sources and methods for terrorism financing are described, as well as unusual characteristics of non-profit organisations that indicates that they may be used for an unlawful purpose. Furthermore, according to paragraph 12(4) of the Directive, the regulated entities, when assessing the money laundering and terrorist financing risks and when applying risk-based measures and procedures, should take into account, among others, the Joint Guidelines, as defined in the Directive, and the Guidelines issued by the Financial Action Task Force (FATF). Additionally, further guidance on terrorism financing was provided through specific CySEC
Circulars, such as C299, C315, C339, C465, C474, C478, C580, C588, C607 and C640.
Proliferation Financing (PF):
The FATF formed a working definition on ‘Proliferation of weapons of mass destruction’ as «The manufacture, acquisition, possession, development, export, trans-shipment, brokering, transport, transfer, stockpiling or use of nuclear, chemical or biological weapons and their means of delivery and related materials (including both dual-use technologies and dual use goods used for non-legitimate purposes)». Furthermore, the FATF defines ‘Proliferation Financing’ as «The act of providing funds or financial services which are used, in whole or in part, for the manufacture, acquisition, possession, development, export, trans-shipment, brokering, transport, transfer, stockpiling or use of nuclear, chemical or biological weapons and their means of delivery and related materials (including both technologies and dual-use goods used for non-legitimate purposes), in contravention of national laws or, where applicable, international obligations».
The regulated entities should have in place effective processes to identify, assess, monitor, manage and mitigate proliferation financing risks. For this purpose, the regulated entities should identify and understand the proliferation financing risks they might face, as a result of their business operations and client relationships, have the knowledge of the requirements to counter proliferation financing risks and threats, as well as have the awareness of common evasive techniques used to circumvent the identification of these practices. The relevant legal obligations of the regulated entities are primarily coming from the following:
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The Law that provides for the Implementation of the Provisions of the United Nations Security Council Resolutions or Decisions (Sanctions) and the European Union Council’s Decisions and Regulations (Restrictive Measures) of 2016, as amended, (Law 58(I)/2016).
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The obligations for the implementation of the UN Sanctions and EU Restrictive Measures (refer to the relevant section on CySEC’s website).
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The Combating of Terrorism and Victims’ Protection Law of 2019, as amended, (Law 75(I)/2019 – only in Greek).
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The Import and Export of Controlled Items and the Conduct of Controlled Activities Law of 2011, as amended, (Law 1(I)/2011 – only in Greek).
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The FATF Recommendations (primarily Recommendations 1, 2, 7 and 15).
For continuous updates on the abovementioned matters, you could consult the following useful links, in addition to the information above, as well as be notified for other Useful publications/Notifications from the relevant sub-section:
Cyprus National Risk Assessment
Cyprus Financial Intelligence Unit (MOKAS)
EBA’s ML/TF Risk Factors Guidelines (Circular C640)
Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL)
Financial Action Task Force (FATF)
Europol / Eurojust
European Commission / EU list of high-risk third countries
Global Terrorism Index (GTI)
Proliferation Financing Index
Financial Crimes Enforcement Network (FinCEN)