CySEC Slammed Investment Firms with €2.2M Fines in 2023

by Damian Chmiel
  • The regulator conducted extensive audits and prepared for crypto regulation in 2023.
  • In the past three years, the number of financial sanctions reached $6 million.
From left: CySEC Chairman, Dr. George Theocharides
From left: CySEC Chairman, Dr. George Theocharides
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The Cyprus Securities and Exchange Commission (CySEC) carried out over 700 on-site and remote inspections of supervised entities in 2023 and issued over $2.2 million in fines. These thematic audits aimed to ensure compliance with regulations and protect investors.

Investment Firms Face CySEC's Wrath: €6M in Sanctions over 3 Years

CySEC conducted remote checks on investment firms affected by the Russia-Ukraine sanctions, assessing business relationships with sanctioned individuals and investigating forced transfers of Russian securities.

The Market Surveillance and Investigations Department completed 42 investigations, with 48 more ongoing at the end of the year. One case was referred to the Attorney General for potential criminal offenses.

As a result of the supervisory audits, CySEC imposed administrative sanctions totaling approximately €2.2 million in 2023, with €1 million levied on a single investment firm. Over the past three years, €6 million in sanctions have been imposed with €5.3 million on investment firms for regulatory breaches.

In comparison, during the same period, the British FCA cancelled the licences for 1,266 unauthorized firms and issued record fines amounting to £52,802,900. The record holder in this regard remains as the USA, with the SEC and CFTC collectively imposing financial penalties exceeding $9 billion.

Additionally, supervised entities were instructed to take corrective measures in 103 cases, and 35 entities were ordered to comply with anti-money laundering and counter-terrorist financing laws within a specific timeframe. CySEC revoked or suspended the operating licenses of 19 investment firms and two collective investment undertakings.

In the latest exclusive interview with Finance Magnates, CySEC's Chairman, Dr. George Theocharides, emphasized that cryptocurrencies and artificial intelligence are currently among the most critical regulatory concerns. These technologies are poised to revolutionize the entire industry.

“The reality is that while AI can transform the securities market by improving efficiency, increasing accuracy and reduce costs, it is still in its relative infancy,” Dr Theocharides commented. “We are only starting to scratch the surface of how AI can enhance our capacity to innovate and interact with the market. That’s why building trust is going to be an essential element to its broad adoption.”

Preparing for MiCA and Sector Growth

Dr Theocharides highlighted the upcoming Markets in Crypto-Assets Regulation (MiCA) implementation as a significant regulatory change expected by the end of 2024. MiCA aims to ensure investor protection and market integrity in the crypto-asset sector. The CySEC Chairman urged supervised entities to prepare for MiCA's adoption by acquiring appropriate systems and staffing to meet the new requirements. He also cautioned investors about the risks associated with crypto-assets.

Despite challenges in the financial environment, the capital market in Cyprus remains attractive, with 82 new entities approved in 2023, bringing the total number of supervised entities to 830 by the end of February 2024.

"Over the past four years, the number of supervised entities has recorded a 12% increase and is an indication that Cyprus continues to gather substantial advantages as an investment destination," Dr Theocharides added.

Investor Education and Financial Literacy

In 2023, CySEC actively participated in events, workshops, and conferences to promote financial literacy and education. Additionallyl, the commission is a member of the Ad-Hoc Committee formulating a National Strategy for Financial Literacy and Education in Cyprus.

CySEC issued warnings to the public about entities posing as CySEC officials or representatives and websites imitating supervisory authorities.

The Cyprus Securities and Exchange Commission (CySEC) carried out over 700 on-site and remote inspections of supervised entities in 2023 and issued over $2.2 million in fines. These thematic audits aimed to ensure compliance with regulations and protect investors.

Investment Firms Face CySEC's Wrath: €6M in Sanctions over 3 Years

CySEC conducted remote checks on investment firms affected by the Russia-Ukraine sanctions, assessing business relationships with sanctioned individuals and investigating forced transfers of Russian securities.

The Market Surveillance and Investigations Department completed 42 investigations, with 48 more ongoing at the end of the year. One case was referred to the Attorney General for potential criminal offenses.

As a result of the supervisory audits, CySEC imposed administrative sanctions totaling approximately €2.2 million in 2023, with €1 million levied on a single investment firm. Over the past three years, €6 million in sanctions have been imposed with €5.3 million on investment firms for regulatory breaches.

In comparison, during the same period, the British FCA cancelled the licences for 1,266 unauthorized firms and issued record fines amounting to £52,802,900. The record holder in this regard remains as the USA, with the SEC and CFTC collectively imposing financial penalties exceeding $9 billion.

Additionally, supervised entities were instructed to take corrective measures in 103 cases, and 35 entities were ordered to comply with anti-money laundering and counter-terrorist financing laws within a specific timeframe. CySEC revoked or suspended the operating licenses of 19 investment firms and two collective investment undertakings.

In the latest exclusive interview with Finance Magnates, CySEC's Chairman, Dr. George Theocharides, emphasized that cryptocurrencies and artificial intelligence are currently among the most critical regulatory concerns. These technologies are poised to revolutionize the entire industry.

“The reality is that while AI can transform the securities market by improving efficiency, increasing accuracy and reduce costs, it is still in its relative infancy,” Dr Theocharides commented. “We are only starting to scratch the surface of how AI can enhance our capacity to innovate and interact with the market. That’s why building trust is going to be an essential element to its broad adoption.”

Preparing for MiCA and Sector Growth

Dr Theocharides highlighted the upcoming Markets in Crypto-Assets Regulation (MiCA) implementation as a significant regulatory change expected by the end of 2024. MiCA aims to ensure investor protection and market integrity in the crypto-asset sector. The CySEC Chairman urged supervised entities to prepare for MiCA's adoption by acquiring appropriate systems and staffing to meet the new requirements. He also cautioned investors about the risks associated with crypto-assets.

Despite challenges in the financial environment, the capital market in Cyprus remains attractive, with 82 new entities approved in 2023, bringing the total number of supervised entities to 830 by the end of February 2024.

"Over the past four years, the number of supervised entities has recorded a 12% increase and is an indication that Cyprus continues to gather substantial advantages as an investment destination," Dr Theocharides added.

Investor Education and Financial Literacy

In 2023, CySEC actively participated in events, workshops, and conferences to promote financial literacy and education. Additionallyl, the commission is a member of the Ad-Hoc Committee formulating a National Strategy for Financial Literacy and Education in Cyprus.

CySEC issued warnings to the public about entities posing as CySEC officials or representatives and websites imitating supervisory authorities.

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