CySEC Orders Firms to Follow FATF’s COVID-19 AML/CFT Policies

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 COVID-19-related anti-money laundering (AML) and counter-terror financing (CFT) policies.

The official letter was issued on July 16 to all CIFs, ASPs, UCITS management companies, internally managed UCITS, AIFMs, internally managed AIFMs, and internally managed AIFLNPs.

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The Cypriot regulator highlighted that the increasing number of COVID-19-related crimes, including fraud, cybercrime, misdirection, or exploitation of government funds or international financial assistance, which is creating new sources of proceeds for illicit actors.

“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,” the circular noted.

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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.

“[The] paper identifies challenges, good practices and policy responses to new money laundering and terrorist financing threats and vulnerabilities arising from the COVID-19 crisis,” the global agency noted.

The recommendations of the paper fall into three broad categories – new threats and vulnerabilities stemming from COVID-19-related crime and impacts on ML and TF risks; current impact on AML/CFT efforts by governments and the private sector due to COVID19; and some suggestions on AML/CFT policy responses.

Regulators all around the world are 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.

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