Cyprus’s financial
market regulator unveiled comprehensive guidance requiring brokers, crypto and
financial firms to implement strict controls against weapons proliferation
financing (PF)
CySEC Mandates Sweeping
Anti-Proliferation Controls for Trading Firms
The Cyprus
Securities and Exchange Commission’s (CySEC) new
framework demands regulated entities, including crypto platforms and FX/CFD
brokers, to establish robust screening systems and enhanced due diligence
procedures to prevent the financing of weapons of mass destruction through
trading operations.
“As a
country whose financial services account for a large part of its GDP and those
services are attributed to a large number of non-resident customers, the
Republic of Cyprus must be vigilant to PF risks,” CySEC commented in the
official guidance.
“Although
no evidence currently exists that there are direct PF links between Cypriot
entities and persons engaged in weapons of mass destruction proliferation
activities, the exposure of the financial system when conducting international
business and overseas financial transactions poses higher PF risks.”
CySEC Key Requirements
Financial
firms must now:
- Screen
international payments for proliferation financing indicators - Monitor
dual-use goods transactions - Implement
enhanced due diligence for high-risk jurisdictions - Deploy
sophisticated beneficial ownership verification systems
The
guidance specifically addresses crypto-asset service providers, highlighting
concerns about North Korea’s use of digital assets to evade sanctions. Firms
must implement blockchain analysis tools and enhanced transaction monitoring
systems.
Impact on FX/CFD Sector
Cyprus, a
major hub for retail trading firms, hosts numerous regulated brokers serving
international clients. The new requirements reflect growing global pressure to
prevent sanctioned entities from accessing financial markets through complex
corporate structures and cryptocurrency transactions.
For
Cyprus’s substantial FX/CFD sector, the guidance creates significant
operational challenges. Brokers must now:
- Revamp
customer onboarding procedures - Enhance
transaction monitoring capabilities - Implement
specialized staff training programs - Deploy new
screening technologies
This week, CySEC also launched a new website, aimed at enhancing the experience for regulated firms, investors, and the general public. The regulator stated that the updated platform is intended to improve accessibility, transparency, and user convenience. The website features a redesigned interface that is compatible with smart devices.
Cyprus’s financial
market regulator unveiled comprehensive guidance requiring brokers, crypto and
financial firms to implement strict controls against weapons proliferation
financing (PF)
CySEC Mandates Sweeping
Anti-Proliferation Controls for Trading Firms
The Cyprus
Securities and Exchange Commission’s (CySEC) new
framework demands regulated entities, including crypto platforms and FX/CFD
brokers, to establish robust screening systems and enhanced due diligence
procedures to prevent the financing of weapons of mass destruction through
trading operations.
“As a
country whose financial services account for a large part of its GDP and those
services are attributed to a large number of non-resident customers, the
Republic of Cyprus must be vigilant to PF risks,” CySEC commented in the
official guidance.
“Although
no evidence currently exists that there are direct PF links between Cypriot
entities and persons engaged in weapons of mass destruction proliferation
activities, the exposure of the financial system when conducting international
business and overseas financial transactions poses higher PF risks.”
CySEC Key Requirements
Financial
firms must now:
- Screen
international payments for proliferation financing indicators - Monitor
dual-use goods transactions - Implement
enhanced due diligence for high-risk jurisdictions - Deploy
sophisticated beneficial ownership verification systems
The
guidance specifically addresses crypto-asset service providers, highlighting
concerns about North Korea’s use of digital assets to evade sanctions. Firms
must implement blockchain analysis tools and enhanced transaction monitoring
systems.
Impact on FX/CFD Sector
Cyprus, a
major hub for retail trading firms, hosts numerous regulated brokers serving
international clients. The new requirements reflect growing global pressure to
prevent sanctioned entities from accessing financial markets through complex
corporate structures and cryptocurrency transactions.
For
Cyprus’s substantial FX/CFD sector, the guidance creates significant
operational challenges. Brokers must now:
- Revamp
customer onboarding procedures - Enhance
transaction monitoring capabilities - Implement
specialized staff training programs - Deploy new
screening technologies
This week, CySEC also launched a new website, aimed at enhancing the experience for regulated firms, investors, and the general public. The regulator stated that the updated platform is intended to improve accessibility, transparency, and user convenience. The website features a redesigned interface that is compatible with smart devices.
This post is originally published on FINANCEMAGNATES.
