Cyprus is stepping up efforts to address rising money laundering risks in the property sector, with the Ministry of Finances Directorate of Finance Ministry drafting a new bill and launching it for public consultation.
According to an explanatory note accompanying the draft legislation, the need to strengthen preventive measures in property transactions stems from the National Risk Assessment on Money Laundering and Terrorist Financing (NRA AML/CFT2), findings from the Republic of Cyprus’ Mutual Evaluation Report by the Council of Europe’s MONEYVAL Committee, as well as the most recent experience of the authorities.
These initiatives also align with government policy aimed at reinforcing measures against financial crime and enhancing Cyprus’ standing as a credible and reliable international financial centre.
The bill, titled “The Prevention and Suppression of Money Laundering and Terrorist Financing (Amendment) Law of 2026“, has been placed under public consultation on the e-Consultation platform until 14 February.
Cabinet decision and supervisory framework
The Ministry of Finance prepared the bill in line with Cabinet Decision No. 92.715 of 16 March 2022, focusing specifically on the real estate sector.
The working group comprised representatives from the Ministry of Finance, the Ministry of Interior, the Central Bank of Cyprus, the Tax Department and MOKAS. The draft legislation was developed based on the provisions of the Cabinet decision.
Under that decision, preventive AML/CFT supervision in the real estate sector is to be assigned to the Tax Department. The entities subject to supervision will include all professionals who buy or sell property, or who professionally represent buyers or sellers in property transactions, provided they are not already supervised by another competent authority.
The Ministry reiterates that the heightened money laundering risks associated with real estate are also highlighted in the EU-wide Risk Assessment on AML/CFT (2022) by the European Commission, which notes that the property sector is particularly exposed to money laundering and vulnerable to tax-related crimes.
Alignment with new EU money laundering rules
The bill also anticipates upcoming European legislation. EU Regulation (EU) 2024/1624, adopted on 31 May 2024, extends its scope to cover estate agents and other real estate professionals. These provisions will come into force in July 2027 and reflect the international AML/CFT standards set by the Financial Action Task Force (FATF).
FATF guidelines issued in 2022 clarify that all professionals involved in property transactions should fall under preventive AML controls. In parallel, Article 52 of EU Directive (EU) 2024/1640 requires that supervision of obliged entities be carried out by a public authority, a requirement fully met by assigning this role to the Tax Department.
As a result, amending national legislation is considered necessary both to manage existing risks in the interim period and to ensure a smooth transition to the new EU regulatory framework.
What changes under the proposed amendment?
The proposed amendment transfers AML/CFT supervision of estate agents from the Estate Agents Registration Council to the Tax Department, while also extending supervision to all real estate professionals not overseen by another authority.
Credit institutions and credit-acquiring companies already supervised by the Central Bank of Cyprus will continue to fall under its AML/CFT oversight for property-related transactions carried out as part of their professional activities.
The choice of the Tax Department as the competent supervisory authority is justified on several grounds, including:
- its direct involvement in property transactions and the existence of a dedicated Property Unit,
- its existing AML/CFT supervisory role over persons trading or acting as intermediaries in works of art,
- lower implementation costs by utilising existing structures, and
- established practices in other European countries where public authorities undertake preventive supervision.
Comparable models are already in place in the United Kingdom (HMRC), as well as in Luxembourg, Greece, the Netherlands and Latvia.
The Ministry also points out that the 5th EU AML Directive (EU) 2015/849 obliges member states to extend AML/CFT measures to sectors particularly exposed to money laundering or terrorist financing risks.
Consequently, extending AML/CFT obligations to all real estate professionals before the new EU framework takes effect in 2027 is not only permissible, but necessary, based on identified national risks and international standards.
The Tax Department concludes that the reform will significantly strengthen Cyprus’ legal and supervisory framework, reduce money laundering risks in a key economic sector, enhance financial stability and reinforce the country’s position as a trusted international financial centre.
