What is money laundering?
What money laundering means under Cyprus's AML/CFT Law, which property can be laundered, and why the offence reaches far beyond the person who committed the original crime.
By the ExamPass CY editorial teamLast reviewed 6 min read
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Short answer
Money laundering is making property that comes from crime look as if it came from a lawful source, by hiding where it came from, who owns it or where it goes. In Cyprus it is a criminal offence under Law 188(I)/2007, covering anyone who converts, transfers, conceals, acquires, holds or uses criminal proceeds. A person who knew the property was criminal faces up to 14 years in prison, a fine of up to €500,000, or both; one who ought to have known faces up to 5 years, €50,000, or both.
Money laundering in brief
| Point | What the law says |
|---|---|
| What can be laundered | Property of any kind that is the proceeds of a criminal offence |
| Which crimes count (predicate offences) | Any offence that Cyprus law makes a criminal offence, including tax crimes; it does not matter where the crime took place |
| Acts that amount to laundering | Converting, transferring or moving the property to hide its origin; concealing its nature, source, location or ownership; acquiring, holding or using it; helping, attempting or conspiring; passing on information about an investigation so the offender can keep the proceeds |
| Person who knew | Up to 14 years in prison, a fine of up to €500,000, or both |
| Person who ought to have known | Up to 5 years in prison, a fine of up to €50,000, or both |
| Conviction for the original crime | Not needed, and the original offender need not be identified |
Source: Law 188(I)/2007 (the AML/CFT Law), Articles 3 to 5, as amended up to 2026.
Why do criminals need to launder money?
Crime that generates money creates a problem for the criminal: the proceeds are evidence. A large sum of cash, or wealth that does not match any known income, invites questions from banks, tax authorities and the police. Laundering solves that problem by breaking the visible link between the money and the crime, so the criminal can spend, invest or save it without drawing attention.
The process is usually described in three steps: getting the money into the financial system, moving it around to hide the trail, and bringing it back as apparently legitimate wealth. Those steps are explained in What are the three stages of money laundering?
Laundering always starts from criminal proceeds. Money earned lawfully cannot be laundered, however it is moved. Lawful money sent to fund terrorism is a different crime, covered in What is terrorist financing?
Terms used in this note
- Proceeds of crime
- Any property, of any kind, that comes directly or indirectly from a criminal offence.
- Predicate offence
- The underlying crime that produced the proceeds. In Cyprus, any criminal offence under Cyprus law qualifies.
- Self-laundering
- Laundering the proceeds of a crime by the same person who committed that crime. In Cyprus that person can be convicted of the laundering offence as well as the original crime.
What does Cyprus law treat as a laundering offence?
The AML/CFT Law takes an all-crimes approach. Any offence that a Cyprus law defines as a criminal offence is a predicate offence, so the proceeds of fraud, corruption, drug trafficking or tax crimes can all be laundered. The crime may have been committed abroad: it does not matter whether the Cypriot courts would have jurisdiction over it.
The list of laundering acts is deliberately broad. It covers converting, transferring or moving criminal property to hide its origin or to help someone escape the consequences, concealing its true nature, source, location, movement or ownership, and simply acquiring, possessing or using it. Taking part in, attempting, aiding or advising on any of these acts is also caught, as is passing information about an investigation so that the offender can keep the proceeds.
The penalty depends on the person's state of mind. Someone who knew the property was criminal proceeds risks up to 14 years in prison, a fine of up to €500,000, or both. Someone who ought to have known risks up to 5 years, a fine of up to €50,000, or both. Knowledge and intent can be inferred from objective facts, so a professional cannot rely on having asked no questions.
Who can be convicted of money laundering?
The person who committed the original crime can also be convicted of laundering its proceeds, on top of the original crime; this is known as self-laundering. So can anyone further down the chain: an accountant who moves the funds, a relative who holds them, a dealer who accepts them.
A prosecution does not have to wait for a conviction for the original crime, and the prosecutor does not have to prove who committed it. It is enough to show from the facts that the property came from criminal activity, without proving every detail of that activity.
Companies can be liable too, when a person in a leading position commits the offence for the company's benefit, or when poor supervision lets a subordinate do so. The company's liability does not protect the individuals involved. When someone is convicted of converting, concealing or acquiring criminal property, the court treats it as aggravating if the offence was committed within a criminal organisation, involved property of significant value, or was committed by an obliged entity in the course of its business.
How to think about it
Look for four things: property, a criminal source, an act that deals with the property, and a person who knew or ought to have known where it came from. If all four are there, it is laundering, whether the act is elaborate or as simple as holding the money. The state of mind also sets the penalty: actual knowledge carries the higher band, ought to have known the lower one. Finally, check the direction of the money: laundering cleans dirty money, while terrorist financing sends money, clean or dirty, towards terrorism.
Common mistakes
Thinking laundering needs a complex scheme. Acquiring, holding or using property while knowing, or when one ought to know, that it is criminal proceeds is already an offence.
Assuming only the original criminal can be charged. Anyone who handles the proceeds can be liable, and the original criminal can also be convicted of laundering.
Treating lawful income as launderable. Without a criminal source there is nothing to launder. Clean money used to fund terrorism is terrorist financing, a separate crime.
Waiting for a conviction for the underlying crime. No prior or simultaneous conviction for the predicate offence is required.
Mixing up the two penalty bands. 14 years and €500,000 apply where the person knew; 5 years and €50,000 where the person ought to have known.
Legal references
- The Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007 (Law 188(I)/2007), consolidated Greek text on CyLaw (amendments up to Law 25(I)/2026) (opens in a new tab)
Article 3: offences covered · Article 4: laundering offences, penalties and liability of legal persons · Article 5: predicate offences
- Directive (EU) 2018/1673 on combating money laundering by criminal law (opens in a new tab)
- Directive (EU) 2015/849 (4th AML Directive), as amended by Directive (EU) 2018/843 (opens in a new tab)
- FATF Recommendations (Recommendation 3: money laundering offence) (opens in a new tab)
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