CySEC AML Glossary Flashcards: Abbreviations & Definitions | ExamPass CY

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Laws & regulations

Define the AML/CFT Law.: The Prevention and Suppression of Money Laundering and Terrorist Financing Law 188(I)/2007 (as amended) — Cyprus's primary AML/CFT statute. It criminalises money laundering and terrorist financing and sets the preventive obligations for obliged entities.
What are the 4th and 5th EU AML Directives?: The 4th AML Directive is Directive (EU) 2015/849; the 5th AML Directive is Directive (EU) 2018/843, which amended the 4th. Cyprus transposes them through amendments to Law 188(I)/2007.
What is the CySEC Directive in the AML context?: The directive CySEC issues to the entities it supervises, setting detailed AML/CFT procedures — risk assessment, customer due diligence, monitoring and reporting — that give practical effect to Law 188(I)/2007.
What is the Terrorism Law?: The Combating of Terrorism Law of 2010 (110(I)/2010), which criminalises terrorism and terrorist-financing offences in Cyprus.
What is the Sanctions Law?: Cyprus legislation implementing restrictive measures — giving domestic effect to UN and EU financial sanctions and enabling the freezing of designated persons' funds and economic resources.
What is the ASP Law?: The Law Regulating Companies Providing Administrative Services and Related Matters of 2012, governing administrative service providers (ASPs), which are themselves obliged entities.

Authorities & bodies

What is CySEC?: The Cyprus Securities and Exchange Commission — the competent authority that authorises and supervises investment firms and other obliged entities, including their AML/CFT compliance.
What is MOKAS?: The Unit for Combating Money Laundering — Cyprus's Financial Intelligence Unit (FIU). It receives, analyses and disseminates suspicious transaction reports and can order the freezing of assets.
What role does the Attorney-General have in the AML framework?: The Attorney-General of the Republic is the state's chief legal officer, involved in prosecutions and in certain asset-freezing and international-cooperation decisions.
What is the FATF?: The Financial Action Task Force — the inter-governmental body that sets the global AML/CFT standards (the 40 Recommendations) and evaluates countries' compliance with them.
What is MONEYVAL?: The Council of Europe's Committee of Experts on the Evaluation of Anti-Money Laundering Measures — the regional body that assesses member states, including Cyprus, against the FATF standards.
What is the EBA?: The European Banking Authority — the EU authority that issues guidelines and technical standards, including on AML/CFT, for the financial sector.
What is the Advisory Committee for combating ML/TF?: The advisory authority for combating money laundering and terrorist financing established under Law 188(I)/2007, which advises on national AML/CFT policy and coordination.
What is SEOK (the Advisory Committee on Economic Sanctions)?: The Advisory Committee on Economic Sanctions, chaired by the Ministry of Finance, which reviews requests to release frozen funds and recommends approval or rejection to the Minister.

Core ML/TF concepts

Define money laundering (ML).: The process of disguising the illicit origin of criminal proceeds so they appear legitimate — typically through the stages of placement, layering and integration.
Define terrorist financing (TF).: Providing or collecting funds, from legitimate or illegitimate sources, intending or knowing that they will be used to carry out terrorism or to support terrorists.
What is a predicate offence?: The underlying criminal offence that generates the proceeds later laundered — for example fraud, drug trafficking, corruption or tax evasion.
What are 'prescribed offences'?: The offences that trigger AML obligations — money laundering itself together with the predicate (criminal) offences that produce launderable proceeds.
Define 'proceeds' (criminal proceeds).: Any economic benefit or property derived, directly or indirectly, from a criminal offence.
What is 'tipping off'?: Disclosing to a customer or third party that a suspicious report has been or will be filed, or that an investigation is underway. It is a criminal offence.
What is an occasional transaction?: A transaction carried out outside an established business relationship, which triggers customer due diligence once it reaches defined value thresholds.
What is a business relationship?: A professional or commercial relationship connected to an obliged entity's activities that is expected, at inception, to have an element of duration.
What is a National Risk Assessment (NRA)?: A country-level exercise that identifies and assesses a jurisdiction's money-laundering and terrorist-financing risks to inform the risk-based approach.
What is the risk-based approach?: Allocating AML/CFT resources and controls in proportion to assessed risk — applying enhanced measures to higher-risk situations and simplified measures to lower-risk ones.
What are risk factors?: Variables — relating to the customer, product, delivery channel or geography — that raise or lower the money-laundering and terrorist-financing risk of a relationship.

Customer due diligence

What is KYC (Know Your Customer)?: The process of identifying a customer and understanding the nature and purpose of the relationship, forming the basis of customer due diligence.
Who is a beneficial owner?: The natural person(s) who ultimately own or control a customer, or on whose behalf a transaction is conducted — for a company, generally ownership or control of more than 25% of the shares or voting rights.
What is 'source of funds'?: The origin of the specific funds used in a transaction or relationship — for example salary, the sale of an asset, or business income.
What is 'source of wealth'?: The origin of a customer's total accumulated wealth — how the overall net worth was built — as distinct from the source of any particular payment.
Who are Politically Exposed Persons (PEPs)?: Natural persons entrusted with prominent public functions, together with their family members and known close associates. They require enhanced due diligence.
What is a correspondent relationship?: The provision of banking or other services by one institution (the correspondent) to another (the respondent), often cross-border, and carrying elevated money-laundering risk.
What is a respondent bank?: The institution that receives correspondent banking services from another bank.
What is a nominee shareholder?: A person recorded as the registered owner of shares while holding them on behalf of another — the actual beneficial owner.
Who is a senior management official?: An officer or employee with sufficient seniority and knowledge of the institution's ML/TF risk exposure to take decisions affecting it.
What are 'obliged entities'?: The persons and businesses subject to AML/CFT obligations — for example banks, investment firms, ASPs, lawyers and accountants when carrying out relevant activities.
What is the AML Compliance Officer (AMLCO)?: The senior officer appointed to oversee an obliged entity's AML/CFT programme, receive internal suspicion reports, decide on them, and report onward to MOKAS.
What is the Compliance Officer's Annual Report?: A yearly report assessing the obliged entity's compliance with the AML/CFT Law and the CySEC Directive over the period, covering ML and TF prevention matters.
What is 'legitimate interest' regarding beneficial-ownership data?: A recognised, justified reason — such as AML/CFT purposes — for being granted access to beneficial-ownership register information.

Sanctions

Who is a 'designated person or entity'?: A person or entity named on a sanctions list, whose funds and economic resources must be frozen and to whom funds must not be made available.
What are sanctions / restrictive measures?: Financial and economic measures imposed by the UN or EU — such as asset freezes and prohibitions — that obliged entities must screen for and apply.

Crypto assets

What is a CASP?: A Crypto Asset Service Provider, as defined in the CySEC Directive — a business providing crypto-asset services that must register with CySEC and apply AML/CFT controls.
What is a custodian wallet provider?: A provider that safeguards private cryptographic keys on behalf of clients to hold, store and transfer crypto assets — an obliged entity for AML purposes.
What is the 'travel rule' for transfers of funds?: The requirement that originator and beneficiary information accompany transfers — including crypto-asset transfers — so that transactions can be traced.
What is electronic money?: Electronically stored monetary value issued on receipt of funds and accepted as a means of payment by parties other than the issuer.

Persons & entities

What is a shell company?: A company with no genuine operations, employees or assets, often used to obscure ownership or to launder funds.
What is a shelf company?: A pre-registered, dormant company held ready for sale; its lack of trading history can be misused to mask beneficial ownership.
What is a 'third country'?: A country that is not a member state of the European Union.
What is a 'high-risk third country'?: A non-EU country identified as having strategic AML/CFT deficiencies, which triggers enhanced due diligence for business connected to it.