The liberalization of markets, the economic penetration in other jurisdictions, the transnational agreements that allow freedom of movement between the member states, the immediate transfer of capital and the rapid technological developments have overturned the world market equilibrium.
These changes have altered the way of doing business by turning companies' activities from local to international; however, these changes also aided the spread of crime in the economic sphere. It is important to mention that the opening of the markets and the free movement of people and capital, have favored the growth of the economy while in some cases also favored the money-laundering activity.
European Union, International Organizations and Intergovernmental Organizations and States, in an effort to control illegal activities, have enforced laws and adopted directives which aimed at eliminating this phenomenon and further institutionalizing any movements taking place between the markets.
In the fight against these illegal activities, technology plays a leading role because of its ability to collect, control, analyze and broadcast, in real time, information that helps identify suspicious criminal and money-laundering activities. These technologically advanced systems use internationally specialized, integrated databases which assist the investigation process for suspected criminal activities.
Consequently, these systems are valuable allies to the legislator since they assist on monitoring the compliance of businesses and legal entities, on the basis of regulations, laws and directives as listed in the legislative framework.
Following the adoption of the 4th European Directive 2015/849 of the European Parliament and the Council of 20 May 2015, as well as, the publication of the 5th European Directive 2018/843 on 19 June 2018, the provisions of which should be applied at State level in 18 months (January 2020), many reports and discussions have been strongly stressed about the difficulties and high costs involved in harmonizing business and financial institutions.
Taking into consideration that money-laundering and terrorist financing undermine the stability and credibility of a country's financial institutions and systems, have the ability to distort statistical growth rates while discouraging investment by foreign investors and negatively affect inflows of capital from the international market, the short-term costs that we have to bear today will, in the long run, be overcovered by the steady, healthy economic growth of the country.
The efforts for preventing and combating money laundering and terrorist financing, currently being made by the supervisory authorities and businesses in Cyprus i.e. financial institutions, law firms, etc. at a State, European and International level, are being considered to be amongst the strongest competitive advantages of Cyprus.
The enforcement of these laws offers multiple benefits for Cyprus, such as a healthy and steady increase in the country's economic aggregates and improvement in the overall quality of life. Terrorism, all kinds of criminal activity and tax evasion are major problems of every society, causing undesirable consequences such as economic and social instability, trade insecurity and lifestyle, as well as high costs of social harm.
Subsequently, the successful implementation of directives and regulations against money-laundering, are positively contributing in the restoration of Cyprus's trust and reputation as a safe investment destination.
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