CySEC to check businesses with links to passports

The anti-money laundering unit of the Cyprus Securities and Exchange Commission (CySEC) will carry out checks among companies it supervises that have business links with individuals who have secured a passport under Cyprus’ now-defunct citizenship by investment programme, chairwoman Demetra Kalogerou said on Wednesday.

The programme was scrapped in the wake of damning revelations which led to the resignation of the House speaker and an MP and the appointment of a committee of inquiry of which Kalogerou is a member.

“Exactly because this is an issue that has pre-occupied society and all of us more generally, we would like as CySEC to be sure that the investors who have obtained citizenship and who are clients of companies we supervise, have updated files and comply with legislation against money laundering,” she told a press conference called to review the commission’s work last year and its priorities for 2021.

“It is important to know that the laws are being respected and the funds coming to Cyprus through these investors are being supervised,” she said.

It is still not known how many investors this involved as the probe has only just started. Companies offering investment services are required to carry out due diligence checks of the investor, she noted.

Kalogerou said CySEC has asked an external consultant to prepare amendments to the legal framework to give the commission the power to operate as a resolution authority for its sector, along the lines of the central bank for banks. These powers would not apply to systemic Kepey (Cyprus investment firms). CySEC currently has this authority for market makers, but not all companies it supervises.

“We would like to have such powers, even to freeze assets, this is another power other supervisors have and we do not. To be able to freeze the money of clients so others don’t take it and leave Cyprus,” she said.

CySEC currently supervises 779 entities compared to 746 at the end of 2019. They include 242 Cyprus investment companies with 1.6 million clients and total assets of €7.3b.

During 2020, CySEC imposed administrative fines of €3.19m, suspended the licence of eight Kepey and revoked the licence of three.