CySEC Finds AML/CFT Lapses in Regulated Firms’ Operations
- The regulator did not reveal the name of any non-compliant company.
Cyprus Securities and Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. Read this Term Commission, popularly known as CySEC, has issued a circular on Wednesday pointing at various regulatory lapses by the regulated financial services companies with mandatory due diligence measures, AML/CFT risk assessments, and transaction monitoring.
“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,” the regulator noted. This led to an outdated assessment of customers’ money laundering and terror financing risks.
The Necessity of Regulatory Audits
Additionally, the regulator highlighted several weaknesses on the part of the regulated companies with their customers’ due diligence measures.
According to CySEC, many companies are not properly maintaining customers’ economic profile, which includes size and source of income, expected turnover and the source of funds. Additionally, it found weaknesses in the risk-based approach processes to verify the collected customer data and information.
Moreover, the regulator found that many financial services providers have submitted insufficient and inaccurate information about the customers’ main business activities and operations. It further found lapses in the calibration of transaction monitoring based on customers’ business models.
The latest circular on AML lapses followed another similar circular that pointed out several other regulatory shortcomings in CIF operations.
However, CySEC did not reveal the name of any entities where it found the lapses. The regulator is now likely to impose penalties on these companies.
“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,” CySEC Chairwoman, Demetra Kalogerou, noted.
Cyprus Securities and Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. Read this Term Commission, popularly known as CySEC, has issued a circular on Wednesday pointing at various regulatory lapses by the regulated financial services companies with mandatory due diligence measures, AML/CFT risk assessments, and transaction monitoring.
“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,” the regulator noted. This led to an outdated assessment of customers’ money laundering and terror financing risks.
The Necessity of Regulatory Audits
Additionally, the regulator highlighted several weaknesses on the part of the regulated companies with their customers’ due diligence measures.
According to CySEC, many companies are not properly maintaining customers’ economic profile, which includes size and source of income, expected turnover and the source of funds. Additionally, it found weaknesses in the risk-based approach processes to verify the collected customer data and information.
Moreover, the regulator found that many financial services providers have submitted insufficient and inaccurate information about the customers’ main business activities and operations. It further found lapses in the calibration of transaction monitoring based on customers’ business models.
The latest circular on AML lapses followed another similar circular that pointed out several other regulatory shortcomings in CIF operations.
However, CySEC did not reveal the name of any entities where it found the lapses. The regulator is now likely to impose penalties on these companies.
“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,” CySEC Chairwoman, Demetra Kalogerou, noted.