The Cyprus Securities and Exchange Commission ('CySEC') has issued a circular clarifying the effect of recent amendments to article 62 of the Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007, which sets out requirements regarding verification of the identity of clients and beneficial owners.
Entities falling within the scope of the law must carry out customer identification procedures before establishing a business relationship. Article 62 provides that verification of identity should also normally have taken place before a business relationship is established. However, an exception has been introduced for cases that fall under the supervision of CySEC allowing the verification of the identity of the customer and the beneficial owner to be completed during the establishment of a business relationship if this is necessary in order to avoid interrupting the normal conduct of business and where there is little risk of money laundering or terrorist financing occurring, subject to the proviso that these procedures should be completed as soon as practicable after the initial contact.
It is therefore no longer necessary for entities supervised by CySEC to wait until all the verification is complete before transacting business if the specified conditions apply. However, until the verification has been completed the cumulative amount of deposited funds of a customer or beneficial owner should not exceed €2,000, and deposits should be accepted only from a bank account or related credit card in the customer's own name. In any event the verification of identity must be completed within 15 days from the customer accepting the regulated entity's terms and conditions or makes the first deposit, whichever comes first.
Appendix 4 of CySEC Directive DI144-2007-08 of 2012 for the Prevention of Money Laundering and Terrorist Financing has been amended to reflect these changes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.