CySEC Publishes Practical Guide to Combat Proliferation Financing

The Cyprus Securities and Exchange Commission (CySEC) has released a practical guide designed to assist regulated entities in addressing their obligations related to combating the financing of weapons of mass destruction. The guide, published on Monday, seeks to enhance awareness and provide actionable steps for identifying and mitigating risks associated with proliferation financing.

“The practical guide provides common definitions and a general understanding, an overview of the domestic and international regulatory framework, together with international standards and obligations,” CySEC said in its official announcement.

The guide offers a detailed examination of the responsibilities that regulated entities must undertake, emphasizing the importance of thorough risk assessment and management practices. Among its key features are a list of risk indicators or red flags, along with recommended controls and mitigation strategies to tackle potential vulnerabilities effectively.

CySEC referred to the Financial Action Task Force (FATF) definition of proliferation financing, describing it as “the act of providing funds or financial services which are used, in whole or in part, for the manufacture, acquisition, possession, development, export, trans-shipment, brokering, transport, transfer, stockpiling or use of nuclear, chemical or biological weapons and their means of delivery and related materials, including both technologies and dual-use goods used for non-legitimate purposes, in contravention of national laws or, where applicable, international obligations.”

The Commission highlighted Cyprus’ robust legal framework to counter proliferation financing risks, which aligns with international standards. This framework is underpinned by the Law for the Implementation of the Provisions of the United Nations Security Council Resolutions or Decisions (Sanctions) and the European Union Council’s Decisions and Regulations (Restrictive Measures) of 2016 (Law 58(I)/2016), as well as FATF recommendations.

Additionally, CySEC noted the relevance of other domestic laws, including the Combating of Terrorism and Victims’ Protection Law of 2019 and the Import and Export of Controlled Items and the Conduct of Controlled Activities Law of 2011. Together, these regulations form the foundation of Cyprus’ efforts to mitigate proliferation financing risks and meet international obligations.

To comply with these requirements, regulated entities are expected to implement robust policies, procedures, and controls to manage potential exposure to proliferation financing. CySEC stressed the necessity of swift reporting in suspicious cases: “In cases where a regulated entity identifies suspicious customer transactions or activity, this must be immediately submitted to the Unit for Combating Money Laundering in Cyprus (Mokas).”

In addition to the practical guide, CySEC has developed a dedicated section on its website called “Terrorism Financing (TF)/Proliferation Financing (PF).” This resource provides regulated entities with updates, notifications, and tools to support their efforts in addressing terrorism financing and the proliferation of weapons of mass destruction.

“Through this practical guide, regulated entities will raise their awareness in situations where there may be potential financing for the proliferation of weapons of mass destruction,” CySEC explained, underlining the importance of proactive measures in combating these threats.

By fLEXI tEAM