CBC Issues 2025 AML Directive, Easing Requirements for Low-Risk Clients While Upholding Stringent Standards

The Central Bank of Cyprus (CBC) has officially released its 2025 directive on the prevention of money laundering and terrorist financing, signaling a step toward modernising the financial compliance landscape while maintaining rigorous standards.

The updated directive, set to come into force on June 2, 2025, introduces a more risk-sensitive approach, particularly benefiting individuals and businesses with low exposure to financial crime risks.

Announced on Friday, the CBC’s new directive focuses on strengthening the existing framework while also addressing practical challenges faced by customers during their dealings with financial institutions. “The strictness of the directive remains unchanged,” the CBC clarified, underlining its ongoing commitment to “preserving and further enhancing the credibility of Cyprus’ financial system,” which it stressed is critical to ensuring overall financial stability.

In a notable shift, the directive mandates banks and other obligated entities to implement customer service policies that eliminate unjustified barriers to accessing lawful financial services. This measure is particularly aimed at individuals assessed as posing minimal risk of money laundering involvement.

For instance, the CBC noted that “banks may categorise pensioners with no income beyond their pension as low-risk,” adding that the documentation required from such individuals “should be proportional to that risk level.” In such cases, the rules allow for streamlined procedures such as less frequent updating of business relationships and the acceptance of identity document copies instead of originals.

More broadly, the directive introduces flexibility in several areas of compliance. Rather than enforcing a universal update schedule, banks may now tailor the frequency of information reviews based on each customer's assessed risk level. The rule also allows financial institutions to rely on data already obtained during the course of the business relationship, thus reducing the burden of repeated documentation for customers.

Provisions have also been added to accommodate individuals facing health or physical challenges that prevent them from meeting documentation requirements. In these instances, the directive emphasises a need for “sensitivity,” allowing for alternative forms of documentation and methods of verification.

Proof of residence requirements have also been eased, with banks now permitted to accept official government records or electronic utility bills as valid documents. Additionally, the directive enables third parties such as public services to certify documents, and it endorses the use of electronic forms of documentation to further enhance accessibility.

The CBC explained that these measures are designed to improve procedures and reduce administrative burdens on both citizens and businesses. “The CBC believes these steps will simplify procedures, ease the burden on citizens and businesses, and benefit the economy as a whole.”

To ensure transparency and responsiveness, the Central Bank is also inviting the public to share feedback on any challenges faced during account setup or renewal processes with financial institutions. Citizens can do so by emailing cbcinfo@centralbank.cy or by calling 22714100.

Importantly, the CBC has cautioned that these procedural improvements should not be misinterpreted. “Our efforts to streamline procedures should not be interpreted as a relaxation of the regulatory framework,” the Bank stated. “On the contrary, the country’s stringent regulatory requirements remain firmly in place.”

The directive follows extensive consultations with professional organisations and the Commissioner for Personal Data Protection. In addition to publishing the directive and a formal announcement on its website, the CBC has released a detailed FAQ document to help clarify key elements of the new rules.

The Bank reaffirmed its support for both the supervised entities and the public, emphasizing its role in reinforcing Cyprus’ supervisory mechanisms. “We remain dedicated to supporting the effective implementation of legislation,” the CBC concluded, “while also protecting the reputation and stability of the country’s financial system.”

By fLEXI tEAM