CySEC Requires to Follow Recently Introduced FATF’s Policies

As the world is focusing on responding to the COVID-19 pandemic and financial crimes benefiting from COVID-19 fears skyrocketed in recent months the Cyprus Securities and Exchange Commission (CySEC) has ordered all regulated entities under it to implement the Financial Task Force (FATF)-recommended pandemic-related anti-money laundering (AML) and counter-terror financing (CFT) policies. The official letter from CySEC was issued on July 16 to all CIFs, ASPs, UCITS management companies, internally managed UCITS, AIFMs, internally managed AIFMs, and internally managed AIFLNPs.

The COVID-19 pandemic has led to unpredictable and unprecedented challenges world- wide and economic disruption. It has also led to an increase in pandemic-related crimes, including fraud, cybercrime, misdirection or exploitation of government funds or international financial assistance, which is creating number of bad industry participants.

Using information provided to the members of the FATF Global Network, the FATF released a Paper, which identifies challenges, good practices and policy responses to new money laundering and terrorist financing threats and vulnerabilities arising from the world-wide crisis. The FATF released its risk and responses Paper for COVID-19-related financial crimes in May, mentioning several recommendations for maintaining AML and CFT standards.

Paper is based on papers shared on 7 and 23 April with the FATF Global Network of FATF Members and FATF-Style Regional Bodies (FSRBs), together making up more than 200 jurisdictions. Regulators all around the world were reporting an increase in financial crimes by manipulating people with fears of the COVID-19 outbreak. From the UK’s Financial Conduct Authority to the US’ Federal Bureau of Investigation, all have issued warnings against such a spike in financial crimes.

World-wide pandemic is impacting on the ability of government and the private sector to implement anti-money laundering and counter terrorist financing obligations in areas including supervision, regulation and policy reform, suspicious transaction reporting and international cooperation.

The emphasis of COVID-19-related money laundering and terrorist financing risk prevention relates to three key issues:

• New threats and vulnerabilities stemming from COVID-19-related crime and impacts on money laundering and terrorist financing risks;

• Current impact on AML/CFT efforts by government and the private sector due to COVID19;

• Suggested AML/CFT policy responses to support the swift and effective implementation of measures to respond to COVID-19, while managing new risks and vulnerabilities identified, including: charitable activity and economic and fiscal stimulus and financial rescue packages for firms and individuals.

The CySEC expects that regulated entities take due account and consult this FATF’s Paper, as provided in paragraph 17 of the CySEC’s Directive for the prevention and suppression of money laundering and terrorist financing when implementing appropriate measures and procedures on a risk-based approach, and on implementing the customer identification and due diligence procedures.

Offshorelicenese team are ready to assist our clients to acquire ready-made CySEC licensed company or apply for the Cyprus Forex license taking into account new policies requirements from the regulator.

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