Cyprus: Cyprus Anti-Money Laundering Measures And The New Regulations For The Administrative Service Providers (ASP)

The Republic of Cyprus (hereinafter "Cyprus") has been the target of many European Countries due to it's allegedly lack of money laundering measures that damage the European Union. Is the reaction of these European Union Countries justified?

Cyprus, even before joining the family of the European Union had in place legislation as well as a body responsible for the supervision of monetary transactions within its jurisdiction.

The relevant legislation as drafted and proposed by the Parliament in 1996 was approved in 1997 as the Prevention and Suppression of Money Laundering Acts Law. Since then numerous amendments were made with the latest coming into force in 2012.

In addition, Cyprus ratified on 30 Nov 2001 the International Convention for the Suppression of the Financing of Terrorism.

The unit for Combating Money Laundering (MOKAS) was established to supervise the provisions of Prevention and Suppression of Money Laundering Activities Law. MOKAS gained the power to investigate any reports for potential money laundering and has therefore been structured and manned with a variety of professionals such as advocates, custom officers, financial analysts, police officers and many others, making MOKAS a powerful tool in the hand of the Attorney General against money laundering in Cyprus.

The adoption of the Prevention and Suppression of Money Laundering Activities Law 2007 has put Cyprus in line with the international conventions of the:

  • United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Vienna Convention) 1988,
  • Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime 1990,
  • Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism 2005,
  • Relevant European Union Council Directives,
  • EU Council Framework Decisions and the 40+9 Recommendations of the FATF on ML&FT. It participates in the following organizations:
  • Moneyval Committee of the Council of Europe,
  • EU Committee on the Prevention of Money Laundering and Terrorist Financing,
  • Camden Assets Recovery Inter-Agency Network (CARIN),
  • FIU Net Task Force, the Asset Recovery Offices Forum and the FIU Platform.

Recent Measures for ASP's

Foreign investors use the services of local lawyers and accountants, who are qualified in implementing investor's corporate structures. It is vital to be in opposition to recognize which transactions may not be genuine in order to report them to MOKAS. Unfortunately, in the last few years a number of unqualified offices made their appearance in Cyprus, providing "corporate services" without having the necessary know-how and with limited knowledge of Cyprus Law. This inevitably caused problems to a number of investors who realized that the administration of their Company was not in line with Cyprus law. The Parliament of Cyprus, in an attempt to maximize the control over the corporate service market, has recently approved and adopted law 196(Ι)/2012 on Regulating Companies Providing Administrative Services and Related Matters (the "Law").

The Law has put the burden on the Cyprus Bar Association and Cyprus Securities and Exchange Commission to supervise those authorized under the Law and those that are already qualified to provide administrative services.

The Law provides for exempt persons, i.e. persons that are allowed to provide administrative services without applying to the Cyprus Bar Association and Cyprus Securities and Exchange Commission. Namely, the the Cyprus Bar Association and Cyprus Securities and Exchange Commission persons are:

  1. An advocates or an advocates' limited company (L.L.C.) as defined in the Advocates' Law, 42/1961 as amended and a general or limited partnership whose general partners are either lawyers or a lawyers' limited company regulated by the Cyprus Bar Association, in its capacity as regulatory authority for the Prevention and Suppression of Money Laundering Activities Law;
  2. members of the Institute of Certified Public Accountants of Cyprus and a general, limited partnership or a limited liability company whose majority of general partners or shareholders and directors, members of Institute of Certified Public Accountants of Cyprus, in its capacity as regulatory authority for the Prevention and Suppression of Money Laundering Activities Law; and
  3. a subsidiary company, either directly or indirectly, of any of the above persons;

It is therefore important that each investor makes sure that his companies in Cyprus are being administered by a licensed ASP company or by one of the exempt persons. It should be noted that persons that are in breach of the Law are subject to heavy fines by the regulatory authorities.

Reports and Incidents of Money Laundering

The Government of Cyprus has recently obtained two reports from Deloitte and Moneyval who they were instructed to review, among others, the Anti-Money Laundering (AML) procedures used by the Banks and service providers as well as the Customer's Due Diligence (CDD).

Both reports have shown that there is room for improvement but under no circumstances gives the right to any EU Country or otherwise to attack Cyprus as the money laundering jurisdiction of Europe.

We have seen in the near past money laundering scandals around the globe, but those countries haven't been "attacked" by the media and or foreign governments as much as they did with Cyprus.

Some examples of proved money laundering are:

  • In 2013, Guaranty Trust Bank (UK) has been fined with a fine of Ł525,000 for inadequate anti-money laundering control in relation to high-risk customer, politically exposed.
  • in 2012, HSBC Holdings Plc agreed to pay $1.92 billion in fines to U.S. authorities for not applying the anti-money laundering provision, allowing the institution to be used by Mexican drug lords for money laundering.
  • In 2008, Commerzbank was ordered by the Frankfurt civil-court to pay €7.3 million, including confiscation of €6.3 million of profits derived from illegal activity
  • In 2002 what has become known as the "Benex Scandal" which involves allegedly Russian mafia money being moved to the Bank of New York, among others. It has been estimated that $7 to $9 billion was laundered through the Bank of New York accounts.

It should further be noted that a study published by the Tax Justice Network which examined seventy countries found that Germany is one of the biggest havens for tax evasion. It's worth saying that Germany even ranks higher than offshore jurisdictions, such as Cayman Islands, that do not comply with the OECD or EU Regulations and Directives.

In the light of the above mentioned facts each of you can make his own decisions to which countries do really "support" money laundering.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.