THE PREVENTION AND SUPPRESSION OF MONEY LAUNDERING ACTIVITIES LAW 40(I) OF 2022

(Official Translation)

CHAPTER I

GENERAL PROVISIONS

1. Short title This Law may be cited as the Prevention and Suppression of Money Laundering Activities Law 40(I) of 2022.

2. Interpretation (1) In this Law, unless the context otherwise requires: "Acting on behalf of another" means acting in the name of or for the account of another person; "Beneficial owner" means the natural person(s) who ultimately owns or controls the customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those natural persons who exercise ultimate effective control over a legal person or arrangement; "Customer" means any natural or legal person who is the subject of a business relationship or who conducts a transaction with an obligated entity; "Designated non-financial business and profession" means a casino, real estate agent, dealer in precious metals and dealers in precious stones and jewels; "Financial Intelligence Unit" means the Unit for Combating Money Laundering established under this Law; "Money laundering" means the commission of any of the following acts, intentionally, when committed by a person who knows or suspects that the property is the proceeds of crime: (a) The conversion or transfer of property, knowing that such property is the proceeds of crime, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of the predicate offence to evade the legal consequences of his action; (b) The concealment or disguise of the true nature, source, location, disposition, movement or ownership of or rights with respect to property, knowing that such property is the proceeds of crime; (c) The acquisition, possession or use of property, knowing, at the time of receipt, that such property is the proceeds of crime; (d) Participation in, association or conspiracy to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the offences mentioned in paragraphs (a) to (c); "Obligated entity" means any person or entity required to comply with the provisions of this Law, including credit institutions, financial institutions, designated non-financial businesses and professions, and other persons or entities as may be prescribed; "Predicate offence" means any criminal offence which generates proceeds that may be laundered, including but not limited to offences covered by the relevant EU Directives and international conventions; "Terrorist financing" means the act of providing or collecting funds, by any means, directly or indirectly, with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out any of the acts mentioned in Article 3 of the Convention for the Suppression of Financing of Terrorism, signed in New York on 9 December 1999, or any of the offences mentioned in the relevant international conventions; "Trust company or trust service provider" means any person who provides services related to the formation of companies or other legal persons, acting as or arranging for another person to act as a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons, or providing a registered office, business address, correspondence or administrative address for a company, a partnership or any other legal person or arrangement, and acting as or arranging for another person to act as a trustee or similar position in relation to a bare trust or similar legal arrangement.

3. Application This Law applies to all obligated entities operating within the Republic.

CHAPTER II

OFFENCES

4. Money Laundering Any person who commits an act of money laundering as defined in Article 2 shall be guilty of an offence and liable on conviction to imprisonment for a term not exceeding ten years and to a fine not exceeding five million euros.

5. Terrorist Financing Any person who commits an act of terrorist financing as defined in Article 2 shall be guilty of an offence and liable on conviction to imprisonment for a term not exceeding ten years and to a fine not exceeding five million euros.

6. Failure to Report Any person who fails to report a suspicious transaction or activity to the Financial Intelligence Unit as required by this Law shall be guilty of an offence and liable on conviction to imprisonment for a term not exceeding five years and to a fine not exceeding two million euros.

7. Tipping Off Any person who discloses information to the customer or to any other third party in such a way as to prejudice an investigation which may be initiated as a result of a report made in accordance with this Law shall be guilty of an offence and liable on conviction to imprisonment for a term not exceeding five years and to a fine not exceeding two million euros.

CHAPTER III

OBLIGATIONS OF OBLIGATED ENTITIES

8. Customer Due Diligence (1) Obligated entities shall apply customer due diligence measures: (a) When establishing a business relationship; (b) When carrying out an occasional transaction amounting to EUR 15,000 or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked; (c) When there is a suspicion of money laundering or terrorist financing, regardless of any derogatory exemptions; (d) When there are doubts about the veracity or adequacy of previously obtained customer identification data.

(2) Customer due diligence measures shall include: (a) Identifying the customer and verifying the customer's identity using reliable, independent source documents, data or information; (b) Identifying the beneficial owner and taking reasonable measures to verify the identity of the beneficial owner, such that the obligated entity is satisfied that it knows who the beneficial owner is, and understands the ownership and control structure of the customer; (c) Obtaining information on the purpose and intended nature of the business relationship; (d) Conducting ongoing due diligence on the business relationship and scrutiny of transactions undertaken throughout the course of that relationship to ensure that the transactions being conducted are consistent with the obligated entity's knowledge of the customer, their business and risk profile.

9. Enhanced Due Diligence (1) Obligated entities shall apply enhanced due diligence measures in respect of: (a) Business relationships or transactions with persons from countries which provide funding or support for terrorist activities, or which have been identified by relevant international instruments as being subject to counter-measures; (b) Complex or unusually large transactions which have no apparent economic or lawful purpose; (c) High-risk business relationships, including those involving Politically Exposed Persons (PEPs).

(2) In the case of Politically Exposed Persons, obligated entities shall: (a) Have appropriate risk management systems to determine whether the customer or the beneficial owner is a Politically Exposed Person; (b) Obtain senior management approval for establishing such business relationships; (c) Take reasonable measures to establish the source of wealth and source of funds; (D) Conduct enhanced ongoing monitoring of the business relationship.

10. Record Keeping (1) Obligated entities shall keep records of all necessary information, documents, data and results of analysis obtained through customer due diligence measures, as well as records of transactions, for at least five years from the end of the year in which the transaction or the event concluding the business relationship took place.

11. Reporting of Suspicious Transactions (1) Any person who knows, suspects or has reasonable grounds to suspect that funds are the proceeds of crime or are related to terrorist financing shall immediately report such knowledge or suspicion to the Financial Intelligence Unit.

(2) No obligated entity or any of its directors, officers, employees or agents shall disclose to the customer or any other third party that a report has been made or that an investigation is being conducted, if such disclosure might prejudice the investigation (tipping off).

CHAPTER IV

THE FINANCIAL INTELLIGENCE UNIT

12. Establishment There is hereby established a Unit for Combating Money Laundering, hereinafter referred to as the "Financial Intelligence Unit" (FIU).

13. Functions of the FIU The FIU shall: (a) Receive, request, analyze and disseminate to the competent authorities reports and other information concerning money laundering and terrorist financing; (b) Cooperate with foreign financial intelligence units and competent authorities; (c) Provide feedback to reporting entities; (d) Issue guidelines and instructions to obligated entities regarding the application of this Law.

14. Independence The FIU shall operate independently and shall not be subject to any direction or control by any other authority in the performance of its functions.

CHAPTER V

SUPERVISION AND SANCTIONS

15. Supervisory Authorities The Central Bank of Cyprus, the Cyprus Securities and Exchange Commission, the Insurance Commissioner, and other competent authorities as prescribed shall be the supervisory authorities for the obligated entities within their respective sectors.

16. Powers of Supervisory Authorities Supervisory authorities shall have the power to: (a) Conduct inspections and audits of obligated entities; (b) Require the production of documents and information; (c) Impose administrative sanctions for breaches of this Law.

17. Administrative Sanctions (1) Supervisory authorities may impose the following administrative sanctions: (a) Public statement indicating the natural or legal person responsible and the nature of the breach; (b) Order to cease the conduct and refrain from any repetition of the conduct; (c) Temporary ban on any activity; (d) Imposition of administrative fines.

(2) The amount of administrative fines shall be determined in accordance with the prescribed regulations, taking into account the gravity and duration of the breach, the degree of responsibility, and the financial strength of the responsible person.

CHAPTER VI

CONFISCATION AND RECOVERY

18. Confiscation The courts may order the confiscation of property which constitutes the proceeds of crime or which is used or intended to be used for the commission of money laundering or terrorist financing offences.

19. Recovery of Proceeds The State may take measures to recover proceeds of crime located within the Republic or abroad, in cooperation with foreign authorities.

CHAPTER VII

FINAL PROVISIONS

20. Regulations The Minister may make regulations for the purpose of carrying out the provisions of this Law into effect, including regulations regarding: (a) The specific obligations of designated non-financial businesses and professions; (b) The procedures for reporting suspicious transactions; (c) The standards for customer due diligence and record keeping; (d) The cooperation between the FIU and other authorities.

21. Repeals The Prevention and Suppression of Money Laundering Activities Laws of 2007 to 2021 are hereby repealed.

22. Commencement This Law shall come into force on the date of its publication in the Official Gazette.