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By Sandra Nebritova

The recent sanctions imposed on a number of Cypriot companies and individuals has cast yet another shadow on our beautiful island.

As reported previously, the sanctions have been imposed due to the alleged assistance in hiding and disguising the assets belonging to Russian oligarchs.

The reason why this particular case is so damaging to the reputation of Cyprus is that for many years the country has been positioning itself as a financial and services hub for the incorporation of companies, provision of nominee directors, shareholders and registered addresses, as extremely popular.

As the demand for such services was very high, corporate service providers were opening offices all over the island. All these companies will need to be very cautious now and perform a detailed investigation into their client base, as at any point, more sanctions can be imposed if there is even the slightest suspicion that sanctions regulations have been compromised.

While the sanctions have been imposed by the US and UK, but not the EU, this still does not really make a difference.

Funds that are kept in banks will be frozen, as financial institutions that have correspondent relationships with either of the countries will follow suit. Banks require access to other currencies and to be able to perform cross-border transactions, therefore the risk of losing a correspondent account in UK or US is just a way to the financial grave.

There has been a recent outcry from the employees of the sanctioned companies, about not receiving their wages and benefits that lawfully belong to them.

Asset freezes are created in order to prevent further enrichment of the sanctioned individuals, and not threaten the livelihood of associated individuals. However, certain investigations must be performed, and it will certainly take some time to unblock certain funds that are eligible for exception.

It should be noted that the Government of Cyprus did a good proactive move, by taking a decision to form a designated sanctions committee.

While this will not erase the public aftertaste from the imposition of sanctions, it still shows that Cyprus is ready to address the problem, work on it and resolve it.

Let’s hope things will start moving fast and there will be no further damage to the reputation of the country.

Sandra Nebritova is a Certified Anti-Money Laundering Specialist (CAMS)

[email protected]

This post was originally published on https://www.financialmirror.com/2023/05/14/curious-case-of-sanctions/

By Sandra Nebritova

The latest events with the war in Ukraine have shaken the world and had a massive impact on a number of aspects of life, social as well as business.

However, any tragic event that has a major impact, also attracts criminals to use the crisis to their advantage.

These could include:

Fraud

With such a large amount of people willing to help the victims of the war crisis, it is acceptable that donations will be collected in order to provide financial aid.

However, not all of the funds will reach those who need it most. Fraudsters will set up fake donation accounts, share them through social media urging people to help and donate as much as they can. They will use phrases and pictures that will touch people’s emotions and knock them off their guard.

While in such an emotional state, people tend to pay less attention to details, for example, to check the source. Very often, these fraudsters are in blatant violation of anti money laundering regulations and make extra effort to evade authorities.

Funds will be collected and then go directly into the fraudster’s pocket. In order to avoid this, always check whether the organisation you are donating to, actually exists and is properly registered. Check for any misspellings too, as sometimes fraudsters will choose a name that will resemble a well-known charity organisation.

Human Trafficking

As people flee their own country and cross borders to neighboring territories in large numbers, this creates opportunities for human traffickers. With the majority of the migrants and refugees being women and children, it is even more attractive to criminals, as they are more vulnerable and distressed.

Warnings have already been issued, that various individuals have approached women, offering them a ride and a place to sleep. However, once additional questions are asked, those individuals become aggressive.

While there are people who are genuinely trying to help, there are also those who see this as an opportunity to kidnap women and children.

Additionally, there are also cases when individuals approach a group of migrants and offer to take them to countries that currently either do not accept migrants or require specific visas or permits to be allowed to enter. Of course, all this for a hefty price.

In most cases, such arrangements do not end well. People who were forced to leave their country should stay alert and address their needs to the volunteers and government officials.

Front people and front companies

As more and more sanctions are being issued, there will be more and more criminals willing to provide their services in order to bypass them. This includes criminals posing as owners of businesses, while actually they represent an entity that is under sanctions.

They will disguise their relation and open a variety of bank accounts in different countries, including those which have not issued any sanctions against Russian companies or individuals.

Financial institutions should be extra careful now and perform a very thorough due diligence on their current and new customers to ensure that they actually know who their customer is and that they are not breaching their sanctions’ compliance programme.

It is extremely disappointing that such tragic events can be used to someone’s benefit, but this is the reality we are living in and it is better to be well-informed and prepared for any-case scenario.

Sandra Nebritova is a certified AML specialist

[email protected]

This post was originally published on https://www.financialmirror.com/2022/03/19/beware-of-fraudsters-who-thrive-on-crises/

By Sandra Nebritova

The European Commission has presented a new package of changes on the legislation in the approach to Anti-money laundering.

This new package consists of four main points and addresses the weaknesses identified during the study of the latest AML breaches.

How will this affect Cyprus?

One of the most significant changes is creating the unified EU Regulator for AML – the Anti-Money Laundering Agency (AMLA).

While each country still gets to keep their own regulatory authorities supervising the AML programmes of the obliged entities, AMLA will have more powers and have the final say on rulings.

It will also be able to take control of a national agency if it failed to manage and react to risks appropriately.

This will definitely put additional pressure on national agencies (Cyprus being one of them).

Perhaps even jump-start more checks on currently supervised entities so that by the time the AMLA starts its operations at full speed, at least an initial clean-up has been already done.

Another important point is creating a single European Rulebook for AML that should be applied by all member states.

Previously, each Member State had some freedom in their interpretation and application of the EU Directives.

The Rulebook, however, will have a set of directly applicable rules that could not be changed.

This should place all member States in the same position and close some of the existing loopholes.

As some of the Member States are late in applying the EU Directives and still have weaknesses in their AML legislation, those states were more attractive for certain high-risk businesses and criminals trying to launder their proceeds of crime.

For Cyprus, these changes would not cause a lot of turbulence.

While some parts of the legislation take time to be amended and approved, generally, the Laws on Prevention of Money Laundering and Terrorist Financing are extensive, well-defined, and sometimes stricter than the proposed standards mentioned in EU Directives.

Crypto

Third, an equally important point is the coverage of the whole crypto-currency business – the black horse of the financial market.

Proposed amendments will ban anonymous crypto-wallets and impose obligatory due diligence on the customers and transaction tracing.

Cyprus has seen an increase in crypto-businesses establishing themselves in the country.

While local regulators have issued their statements on the approach to such businesses, the proposed amendments will unify the approach for all the EU Member States putting all countries in the same position.

Proposed amendments also suggest covering companies with activities of residency-by-investment schemes, which have been attracting a lot of negative attention, crowdfunding, mortgage/credit intermediaries and consumer credit providers that are not classified as financial institutions.

Additionally, a proposed single limit on cash transactions has been set to €10,000.

However, those Member States that have previously decided to have a lower threshold can still keep their own, lower limit.

Last but not least is the single approach to countries outside the EU, listing “grey countries” – countries that pose risks but are ready to work on them to improve their legislation and control systems, and of “black” ones, countries that pose risks but do not wish to work on them, providing guidance and a set of appropriate measures to be used in such cases.

While it will take quite some time to implement all of the above-proposed changes, this is definitely a big step to an improvement and something to look forward to.

Sandra Nebritova is a certified AML specialist

[email protected]

This post was originally published on https://www.financialmirror.com/2021/08/06/radical-changes-in-eu-aml-rules/