Moneyval reports improvements in money laundering measures

Cyprus on Thursday welcomed a Moneyval report that said the country had improved measures in tackling money laundering and combating terrorism financing, though it identified existing shortcomings.

Moneyval is the Council of Europe’s committee of experts on evaluating anti-money laundering measures and the financing of terrorism.

Commenting on the results of the report and Cyprus’ compliance with the actions, the government said there has been “significant improvement” in recommendations to deal with money laundering.

The statement from the presidency said that it was important that Moneyval found that the Republic of Cyprus had achieved the general expectation and had corrected and complied with most international standards for combating money laundering and illicit terrorist financing within 2023.

The government underlined its “unwavering commitment” to ensure that “our country meets all international standards with regard to the fight against money laundering and the fight against the financing of terrorism”.

The finance ministry said that they were committed to continue efforts to minimise the risks and address the phenomenon of illicit finance.

The ministry thanked the money laundering unit in Cyprus Mokas, who leads the delegation to the Moneyval Committee, as well as, all supervisory authorities, including the police and the interior ministry “for their continued and successful efforts to combat illicit finance, as reflected in this assessment.”

The report found Cyprus to have improved its compliance with the Financial Action Task Force’s new technologies.

It also noted progress towards improving its level of compliance with non-profit organisations.

According to the report, since November 2022, Cyprus has improved the virtual asset service providers regime with only a few minor deficiencies remaining.

Moneyval added that several measures to assess terrorism financing risk exposure by the non-profit sector and strengthen oversight activities have been taken, although these have not yet been fully implemented.

Regarding the recommendation for the non-profit sector, Cyprus was still found to be partially compliant.

“Cyprus has taken a number of measures in respect of NPOs, however, a number of shortcomings remain,” the report specified.

According to the report, a formalised document on terrorist financing risk assessment of the non-profit (NPO) sector containing analysis and conclusions on risks and threats pertaining to NPO sector is absent.

However, the report added that the authorities were able to provide a risk categorisation matrix and anonymised replies to a risk assessment questionnaire.

That assessment, according to the report, does not cover non-profit companies.

Regarding law enforcement capability, Moneyval found Cyprus has demonstrated that law enforcement and other competent authorities does not possess specific investigative expertise and capability to examine non-profits exploited for terrorist activities or by terrorist organisations.

On new technologies and improvements in key deficiencies, Cyprus was found to have made clear progress by adopting a national action plan on virtual assets and their providers.

Although Cyprus was found “largely compliant” with recommendation on new technologies, Moneyval found a few minor shortcomings remain.

One is the lack of requirement to identify and assess risk that may arise in relation to new business practices or developing technologies.

The report added that some gaps in relation to the application of fit and proper measures remain, as well as an issue with insufficient sanctions and preventive measures for failure to register as required, for virtual asset providers.

“Overall, Cyprus has made progress in addressing most of the technical compliance shortcomings identified in its 2019 Mutual Evaluation Report,” Moneyval found.

Out of 40 recommendations, Cyprus currently has 16 rated as compliant, 21 rated as largely compliant, and three are partially compliant.

The country is expected to report back to Moneyval by May 2025 on further progress made.