CoE’s Moneyval sees progress in banking checks

The Council of Europe’s anti-money laundering watchdog said that Cyprus banks seem to have made significant progress in banking checks and will report on its next assessment in September.

Money laundering – the process through which criminals give an apparently legitimate origin to proceeds of crime – is an expanding and increasingly international phenomenon. Current estimates of the amount of money laundered worldwide range from $500 bln to a staggering $1 trln, with disastrous effects on the global economy, especially on vulnerable, developing economies.

In its annual report for 2014, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) said that it conducted two follow-up reports on the Special Assessment of Cyprus.

From its previous report ion December 2013 when MONEYVAL said that “while the focus of the (Central Bank of Cyprus) efforts had been on strengthening the financial system in Cyprus, it was clear that much work still needed to be done” with another report scheduled in March 2014.

The follow-up report suggested that “he outcome of the analysis confirmed the expectations of the CBC and did not give rise to any particular areas of concern which required a significant alteration to the CBC’s supervisory priorities.”

In total, the CBC conducted comprehensive onsite examinations at eleven banks in 2014, but the CoE watchdog added that “while it was noted that measures to strengthen and improve AML/CFT programmes had been implemented, some weaknesses were identified.”

In June 2014, the CBC conducted a short focused visit (1 to 2 days each) at nine banks. Overall, the banks were found to have been implementing the recommendations made in the MONEYVAL Special Assessment Report.

“Weaknesses were identified in some areas and guidance for i mprovement was given to the banks concerned. No sanctions were imposed since the purpose of these visits was mainly to exercise oversight over the implementation of the recommendations,” the report said.

The 15 banks (out of a total of 32 banks in Cyprus) which were selected by the CBC for closer scrutiny (either by receiving a comprehensive examination or a focused visit) together comprised over 85% in total assets and 68% in deposits of the entire banking sector. The selection was made on the basis of the risk-based off-site tool recently implemented by the CBC.

Further developments were reported in relation to the setting up a register of ‘blacklisted’ third party introducers. Cyprus has been requested to provide a report to the 48th Plenary in September 2015 on further progress made in relation to the Special Assessment.

The general conclusions of the annual report said that “the emergence of IS in 2014 underlined once again the importance of its mission on financing of terrorism. MONEYVAL’s work on AML is also central to the protection of the Rule of Law in Council of Europe states (and other States and territories covered by MONEYVAL). This is because effective anti-money laundering measures take the profit out of crime and disrupt organised criminality.”