Cyprus Securities and Exchange Commission (CySEC) has issued a circular on Wednesday identifying common weaknesses, as well as good practices among regulated firms in relation to the prevention of money laundering and terrorist financing.
The findings of the regulator were based on onsite inspections performed in 2019 and 2020. These inspections were aimed at assessing the regulatory firms’ compliance with mandatory laws to contain and fight money laundering and terrorist financing.
The Cyprus watchdog identified various lapses in common due diligence measures in regulated firms such as incomplete customer economic profiles, omissions in the verification of the collected customers’ data and information, deficient due diligence and insufficient or inaccurate documentation on customers’ business activities.
On a number of occasions, it was observed that the AML/CFT risk assessments were not reviewed to evaluate whether they needed adjustment upon subsequent changes of the customers’ risk profiles. As a result, the assessment of the customers’ ML/TF risks was not up to date and therefore CDD and ongoing monitoring was not always effective or as effective as they could have been.
CySEC did not reveal the names of any of the firms where it found those regulatory lapses.
Regulated entities need to be making constant and continuous efforts to ensure processes to prevent ML/TF are adequate. The consequences of failing to manage risks associated with ML/TF are serious and cause damage not only to Regulated Entities, but to the financial system as a whole.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.