The Cyprus Securities and Exchange Commission (CySEC) on 14th of March released new guidelines on certain aspects of the compliance function requirements. These guidelines aim to ensure common, uniform, and consistent application of legal requirements related to compliance matters according to article 17(2) of the Investments Services and Activities and Regulated Markets Law (“the Law”) and Article 22 of the MiFID II Delegated Regulation 2017/565.

Check out the most recent details, provided in the official announcement of CySEC via the link below:
https://lnkd.in/eJQGnPbf

The Financial Action Task Force (FATF) is a global anti-money laundering watchdog that monitors and assesses countries’ efforts in combating money laundering and terrorism financing. Recently, on 24 February 2023, FATF added, among others, South Africa and Nigeria to its “grey list” of countries that do not meet the standards set by the organization. This development is significant, as South Africa and Nigeria are Africa’s two largest economies, and their inclusion in the grey list could have far-reaching implications for their financial systems.

Additionally, FATF removed Cambodia and Morocco from its grey list, citing significant progress in their efforts to improve their AML/CFT regimes. This demonstrates that countries can take concrete steps to address the issues identified by FATF. It also highlights the importance of collaboration between governments, financial institutions, and other stakeholders in the fight against money laundering and terrorism financing.

In conclusion, the inclusion of South Africa and Nigeria in FATF’s grey list highlights the need for these countries to strengthen their AML/CFT regimes to address the identified deficiencies. Lastly, find below the latest table with all the Jurisdictions that are on the “grey list” and the “black list”.

Please find below the relevant FATF link:

https://www.fatf-gafi.org/en/publications/High-risk-and-other-monitored-jurisdictions/Increased-monitoring-february-2023.html

On February 14, 2023, the European Council added Russia, the BVIs (British Virgin Islands), Costa Rica, and the Marshall Islands to its list of non-cooperative jurisdictions for tax purposes.

This move reflects concerns over these countries’ tax transparency and anti-money laundering practices, and it’s essential for businesses to review their portfolios and assess any exposure.

This development emphasizes the need to stay informed of regulatory changes and comply with anti-money laundering measures.

In continuation of Circular C537, CySEC issued Circular C539 which indicates that the CIFs that do not reach the materiality threshold of 50 retail clients (including clients treated as professionals on request), in each EEA country should inform the Commission accordingly. More specifically, the CIFs that do not reach the materiality threshold should submit by Friday, 27th of January 2023, the latest the Appendix included in Circular C539 by sending an email to riskstatistics.cifs@cysec.gov.cy.

A formal notice was published last Friday, January 6, by the Financial Services Authority (FSA) of Saint Vincent & the Grenadines (SVG) regarding a new set of requirements for Business Companies (BCs) and Limited Liability Companies (LLCs) engaging in FOREX business activities. The said notice provides for the following with immediate effect:

• Companies that wish to engage in FOREX activity need to provide a certified copy of the requisite licenses from the jurisdiction(s) where their business activities will be performed.
• Companies that are already registered in SVG and engage in FOREX activity will be provided 45 days (until March 10, 2023) to provide the FSA with a certified copy of the requisite licenses from the jurisdiction(s) where their business activities will be performed.

  The FSA notes that failure to follow these requirements will lead to sanctions against the mentioned type of companies.

The European Securities and Markets Authority (ESMA) published their latest newsletter for November 2022, #ESMA “Spotlight on Markets”, in which there is a reference on the opening statement of Steffen Kern (ESMA Head of Risk Analysis and Chief Economist), who described the implications of FTX collapse within the European Union (EU).

The analysis and observations within the opening statement have been conducted based on public information about the matter, as FTX was neither regulated nor supervised by ESMA and the latter do not have access to any particular information beyond what is publicly available.

While briefly summarizing the FTX case from a regulatory perspective, ESMA concluded in the following considerations:

1. Segregation of client assets is a crucial safeguard not only in traditional finance but in crypto markets as well. Back in 2018 and also the current year, ESMA issued relevant warnings about the risks involved in crypto-assets.
2. Crypto-assets experience huge volatility in prices due the risks involved in holding them such as market, liquidity and operation risks; ESMA explains that crypto-assets have raised concerns around the potential of ML/FT criminal activities, and market manipulation.
3. Lastly, the widespread and often aggressive marketing of crypto-assets to the mass market without disclosing the extreme risks involved may affect consumers’ judgement.

ESMA notes that FTX’s collapse amplify evidence that the crypto-assets market might have very weak corporate governance and controls.

Taking into consideration all the mentioned fundamental risks involved in crypto-assets markets, ESMA pointed out that its concerns around those risks were the basis of the rationale for the implementation of MiCA Regulation. The utmost matter of urgency for ESMA is the implementation of protections and rules around crypto-assets market so to achieve the protection of investors and market participants.

Our dedicated team at FiveComply is constantly updating in the matter to offer to you the latest updates in the legal framework. We can assist you with your queries; contact us for more information!

The Financial Services Authority (FSA) has announced via the issuance of its Circular on the 5th of December 2022 that the deadline for the submission of the Bi-Annual Report on Consumer Protection will now be the 15th of July 2023 and not the 15th of January 2023 as was previously announced following the enactment of the Financial Consumer Protection Act (FCPA) on the 1st of May 2022.

The FSA further advised that guidelines as to the content of the report will be issued in the immediate future.

FiveComply’s team of experts can assist you in meeting your reporting obligations with the FSA Seychelles.

The Financial Services Authority (FSA) of Seychelles, via the issuance of its Circular on 29^th of November 2022, wishes to provide clarifications regarding the contents of the Annual Compliance Form required to be submitted by Securities Dealers.

The Annual Compliance Form is an obligation imposed under Regulation 13(h) of the Anti-Money Laundering and Countering the Financing of Terrorism Regulations, 2020, under which the Compliance Officer of the Securities Dealer needs to ensure the preparation and submission of the Form to the FSA within 90 days after each calendar year.

The said Circular clarifies that the submission of the reporting obligation related to the Annual Compliance Form should be made, as per the following:

1. The Annual Compliance Form template to be used has been provided by the FSA;
2. The Form submitted needs to be accompanied by the institutional risk assessment as per section 32(5) of the AML/CFT Act and any other documentation on the identification, assessment and mitigation of ML/TF risks that the Securities Dealer applies;
3. The Annual Compliance Form to be submitted should additionally cover the areas below:

1. Introduction
2. Compliance structure and staffing
3. Institutional Risk Assessment
4. Customer Due Diligence (e.g. results of due diligence on customers, business relationships, transactions, etc.)
5. Enhanced Due Diligence (e.g. results of the enhanced due diligence conducted)
6. Politically Exposed Persons (e.g. results of the enhanced due diligence on persons identified as PEPs)
7. Reliance on regulated persons
8. Statistical history concerning the transactions reported to the FIU as well as the amount of the funds involved.
9. Breaches under the AML/CFT Act
10.   AML/CFT trainings
11.   Staff: Summary of the disciplinary actions, resignations or terminations of compliance staff including the reasons for same.
12.   Requests for information received from supervisory authorities and law enforcement agencies.
13.   Review of compliance program and top deficiencies identified.
14.   Plans for next year.

FiveComply’s team of experts can assist you in meeting your reporting obligations with the FSA Seychelles; contact us now to find out more about our services.

During their Board meeting, the Cyprus Securities and Exchange Commission (“CySEC”) concluded to the replacement of Circular 256 by issuing Circular C534, regarding the provision of investment and ancillary services and/or performance of investment activities in third countries.

CySEC stated the need for CIFs of notifying CySEC via a letter for their intentions to provide investment and ancillary services and/or perform investment activities in third countries.

More specifically, the CIFs should perform the following actions:

1. i) Prior to providing/performing the said services/activities in third countries, CIFs need to acquire the necessary authorisation by the respective competent Authorities of the third countries, in accordance with their legislative framework.
2. ii) CIFs should provide CySEC with a certified copy of the authorisation for the provision of these services by the competent Authority of the third country.

• iii) In the case that the third country does not require such authorization, the CIF must provide CySEC a relevant certificate from the Competent Authority of the Third country, stating that the legislation does not require such authorisation for the services/activities to be carried out.

The main change with the issuance of the new Circular C534, refers to the point (iii) above – Please note that a legal opinion (issued by a qualified lawyer or legal firm) shall not suffice anymore, as the Commission shall require a certificate form the respective competent authority of the third country instead.

CIFs that are already operating in third countries should ensure that they continue to comply with the Legislative Framework applicable in the relevant Third Country.

Our dedicated team at FiveComply is constantly updating in the matter to offer to you the latest updates in the legal framework. We can assist you with your queries; contact us for more information!

On 22 November 2022, the European Court of Justice (ECJ) has decided that open public access to the registers of the beneficial owners (BO) of companies registered in EU member states is no longer valid, as it contravenes with Articles 7 (Respect for Private Life) and 8 (Protection of Personal Data) of the Charter of Fundamental Rights of the European Union.

In particular, the ECJ took the view that the unrestrained public access to the BO registers of EU Member States constitutes a serious interference with the aforementioned fundamental rights, enabling a potentially unlimited number of persons to have access, retain or disseminate information related to the material and financial situation of a beneficial owner.

Despite the fact that, the EU legislature by the introduction of the said measure seeks to prevent money laundering and terrorist financing, the Court considers that the said measure is disproportionate to the objective of general interest pursued and poses a more serious interference able to offset any benefits.

In the aftermath of the ECJ ruling, various EU Member States have suspended the open access to their BO registers. However, the impact of the decision remains to be seen, as one might consider that it might not only affect the European legislative framework, but might also influence jurisdictions on an international level, an example being the United Kingdom.

The official press release of the European Court of Justice can be found here.

The FiveComply team of experts shall remain vigilant and keep you updated in regards to all recent legislative and regulatory developments.

Contact us now for any questions you may have:
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