The Central Bank of Cyprus Introduces New AML Directive Focused on Risk-Based Compliance

The Central Bank of Cyprus (CBC) has published its 2025 directive on the prevention of money laundering and terrorist financing by reinforcing its commitment to financial transparency and regulatory integrity.

The directive was officially released in the Republic’s Gazette on May 2nd, 2025, and is expected to come into force on June 2nd, 2025.

The updated directive has introduced more flexible compliance procedures without compromising the dependability of strict Cyprus’ financial monitoring.

The CBC has also reaffirmed its goal to protect the credibility of the country’s financial system and stressed “the strict requirements of our country’s regulatory framework remain in place.”

It is noted that the new Directive encourages banks and other obligated organizations to develop rules to avoid unjustifiable denial or delay of lawful access to financial services, at least for persons who they believe have a low risk of being associated with money laundering.

The CBC further establishes that banks may designate pensioners with no other income than their pension as low risk, and that the information they require from them should correspond to that risk level.

The directive has permitted the obligated entities to determine the frequency of updating customer relationships based on the risk by eliminating the mandatory reviews for low-risk individuals.

It has also reinforced the idea that not all customers present the same level of risk, and compliance frameworks should reflect that.

Banks and financial institutions are now allowed to accept copies of identification documents instead of the original documents to simplify compliance procedures for the customers.

Moreover, previously obtained customer information can be reused, which can significantly reduce the documentation verification burden for individuals when updating their records.

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The directive also introduces accommodations for the citizens who are facing physical or health limitations by accepting alternative documentation methods and proof of residence through government-issued records or electronic utility bills.

It has been stated that the new directive is aimed at “simplifying procedures, making life easier for citizens and businesses, and benefiting the economy as a whole.”

Reportedly, the document verification by the authorised third parties, such as government services, and the acceptance of electronic formats are now permitted as it simply aimed at enhancing both AML compliance efficiency and customer service.

The CBC has made the directive available on its website and encourages the public to report any legitimate challenges in dealing with banks or other obligated entities.