In Cyprus, a draft law introducing amendments to legislation on the prevention and combating of money laundering and terrorist financing has been submitted for public consultation. The initiative was prepared by the Ministry of Finance through the Directorate of Financial Services by decision of the Council of Ministers and forms part of a broader strategy to strengthen financial transparency. Particular attention in the document is paid to real estate purchase and sale transactions, which in recent years have been regarded as one of the areas of increased risk.
The relevance of the initiative is driven by the growing threat of money laundering through the real estate market at both the national and pan-European levels. Cyprus, while remaining an attractive jurisdiction for investment in residential and commercial property, seeks to proactively adapt its legal system to new European Union standards and international requirements.
Why changes to the legislation were required
The basis for revising the existing rules was the findings of the National Risk Assessment on money laundering and terrorist financing, as well as the results of Cyprus’s mutual evaluation by the Council of Europe’s MONEYVAL committee. An additional factor was the European Commission’s pan-European risk assessment for 2022, in which the real estate sector was explicitly identified as one of the most vulnerable to financial abuse and tax crimes.
The draft law takes into account the provisions of the new European anti-money laundering package, including EU Regulation 2024/1624 and EU Directive 2024/1640. These acts significantly expand the range of persons obliged to comply with financial control measures, going beyond traditional real estate agencies. Full application of the new rules at EU level is expected from 2027, and the Cypriot authorities view the current changes as a transitional adaptation phase.
Expansion of the range of supervised participants
The key objective of the proposed amendments is to strengthen preventive supervision in the real estate sector and close existing regulatory gaps. The new approach is the inclusion within the scope of the law of all persons who, on a professional basis, participate in real estate purchase and sale transactions or represent the interests of sellers and buyers, even if formally they do not fall into traditional categories of supervised entities.
At the same time, the emphasis is placed not on the title of the profession, but on the nature and regularity of the activity. This approach makes it possible to cover a wider range of operations and reduce the likelihood of real estate being used in schemes for laundering illicit proceeds.
Transfer of supervisory powers to the tax authorities
A significant change is the transfer of preventive supervisory functions in the real estate sector to the Cyprus Tax Department. After the amendments are adopted, the Tax Commissioner will be responsible for monitoring compliance with anti-money laundering requirements by both real estate agents and other professional market participants not subject to the supervision of other authorities.
This decision entails a redistribution of powers previously partially held by the Council for the Registration of Real Estate Agents, while maintaining the jurisdiction of bodies such as the Central Bank of Cyprus with regard to organizations already under their supervision. According to the authors of the initiative, this step will increase system efficiency and ensure a unified supervisory approach.
Role of the Tax Department and international practice
The choice of the Tax Department as the supervisory authority is explained by its direct involvement in processes related to property transactions, as well as its accumulated experience in oversight in other sensitive areas, including the art market. An additional advantage is considered to be the reduction of administrative and financial costs, as there is no need to create a new control mechanism from scratch.
Such a model is consistent with the practice of a number of European Union member states, where fiscal authorities are responsible for overseeing compliance with anti-money laundering requirements in the real estate sector.
Link with European and international standards
The draft law fits organically into the process of gradually bringing Cypriot legislation into line with the updated European AML framework. The expansion of preventive measures until 2027 is regarded as permissible and appropriate from the perspective of current EU law and the recommendations of the Financial Action Task Force (FATF).
This approach should ensure regulatory continuity, avoid legal gaps during the transition period, and enhance cooperation between competent authorities. In the long term, it is aimed at increasing trust in the Cypriot real estate market among investors and international partners.
Public consultation and next steps
The draft law has been published on the state electronic platform for public consultation, allowing professional associations, businesses, and private individuals to submit their comments and proposals. After analyzing the feedback received, the Ministry of Finance will revise the text and submit it to the House of Representatives for consideration.
The final content of the law and the timeline for its entry into force will depend on the course of parliamentary discussion; however, it is already clear that Cyprus is taking another step toward tightening control over real estate transactions and strengthening its anti-money laundering system in line with European and international standards.