The Cyprus Securities and Exchange Commission has issued information on the main themes arising from its latest on-site inspections assessing the compliance of regulated entities with their obligations under anti-money laundering legislation.

According to CySEC, while the recent inspections have revealed an overall improvement and strengthening in the internal policies and controls implemented by regulated entities, they have also brought to light several areas requiring attention, including:

  • The need for improved coordination and communication between the compliance function and senior management in order to correctly assess the risks faced by the entity concerned, together with clearer definition and understanding of the role and responsibilities of the compliance department. 
  • Inadequate resourcing of the compliance function, giving rise to conflicting obligations and time pressures.
  • The need for timely and comprehensive resolution of deficiencies revealed by internal audits.
  • Failure to tailor internal documentation and manuals to the specific circumstances of the entity, and to keep them up to date.
  • Weaknesses in procedures and controls for identifying high risk clients and transactions and for triggering enhanced verification procedures. 
  • Deficiencies in the data used to compile clients' economic profiles and failure to update profiles regularly.
  • Deficiencies in monitoring of clients' accounts and transactions and in investigating variances, and in records of the monitoring and resolution of queries.
  • Weaknesses in the procedures for screening clients in respect of EU or UN sanctions.
  • Weaknesses and delays in client identification procedures and record keeping.

CySEC has already written to the firms where deficiencies have been identified instructing them to take remedial action, and it also requires all other regulated entities to review and reassess their procedures in order to ensure that no such deficiencies exist.

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