AML: compliance culture and reporting obligations
The Cyprus Securities Exchange Commission (CySEC) following a series of updates and issuing circulars along with relevant directives, is arguably putting emphasis on proactively encouraging firms to ensure compliance with the Anti-Money Laundering and Financing Terrorism (AML/CFT) Law. CySEC’s main objective is to ensure the establishment of high standards in investor protection, as well as the application of best practices by the obliged entities.
The regulator’s objective is supported by the introduction of the CySEC Directive for the Prevention and Suppression of Money Laundering and Terrorist Financing, which came into force in May 2019. The announcement of the Anti-Money Laundering examinations for those appointed as AML compliance officers, in all CySEC regulated entities followed suit in December, 2019. Additionally, we wait for the regulator to announce the transposition of the EU 5th Anti-Money Laundering Directive (AMLD) into national legislation.
In this commentary, SALVUS team provides guidance into the creation of a strong AML compliance culture within the organization and discusses the obligations of all stakeholders and their annual training requirements.
We further provide the gist of relevant key concepts in the AML examinations, for candidates preparing towards the AML certification examination.
Establish a strong compliance culture
All obliged entities should aim to establish a strong compliance environment, which will supersede the profit-making activities or other business priorities, designed to:
- comply with the relevant national regulatory framework,
- manage and mitigate the risks the entity is exposed to,
- protect the entity against ML and TF, while protecting the entity’s brand and reputation,
by employing the following:
- designate a Compliance officer to supervise the day-to-day procedures of the compliance function,
- implement a system of internal policies, controls and procedures, which is based on a risk-based approach (RBA),
- design an ongoing employee training program, and
- assign an independent audit function to monitor and evaluate on an ongoing basis the effectiveness of the policies, controls and procedures that have been implemented.
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