Article 4 min

CySEC KYC and Identity Verification Regulations

CySEC AMK, KYC and identity verification

April 15, 2024  

Efficient Know Your Customer (KYC) processes are fundamental to meeting Cyprus Securities and Exchange Commission (CySEC) requirements.

Identity verification backed by local expertise and data precision helps organizations meet those compliance requirements for different risk levels while controlling onboarding costs. Companies also can avoid excessive onboarding friction by accelerating secure verification.

CySEC KYC Regulations

CySEC regulates a broad range of industries, including investment services and transactions in transferable securities.

Those regulations include Anti-Money Laundering (AML) directives. Cyprus, a European Union member, has amended its AML law to mirror provisions in the EU’s sixth AML directive (6AMLD).

CySEC’s unofficial English translation of the “Directive for the Prevention and Suppression of Money Laundering and Terrorist Financing” provides guidance across a broad range of due diligence requirements. Those include:

Risk-Based Approach

CySEC recommends a risk-based approach to achieving compliance. That approach enables organizations to assess different onboarding risks and adjust due diligence to match the circumstance.

Identity Verification

Entities that operate with a CySEC license need to perform identity verification before a business relationship is established. When the verification is remote, the organization must ensure the methods, procedures and controls are secure and reliable.

They must also regularly check customer data and reverify if it’s found to be inaccurate or if there’s been a substantial change in the information or nature of the account.

Business Verification

Organizations onboarding businesses need to collect enough information to understand the nature of the company’s activities and the expected pattern and amount of transactions.

They also need to verify the company’s beneficial owners and assess the ownership and control structure.

“However, it is noted that no single form of identification can be fully guaranteed as genuine or representing correct identity,” according to the English translation, “and, consequently, the identification process will generally need to be cumulative.”

CySEC Identity Verification Standards

Under CySEC requirements, Cyprus residents must provide name, address, phone number, email, data and place of birth, and job details for verification. Nonresidents should have a passport or national ID card.

An official document, such as a utility bill, can provide proof of address. Verification relies on two matches from two independent data sources. The first provides a match for name and address. The second provides a match for name and address or birthdate.

Many organizations use CySEC licensing for compliance across the EU. They can fine-tune their compliance programs and expand their verification ability by using documentary and nondocumentary techniques paired with local and global data sources.

CySEC requires a broad range of data for business verification.

·       Registered number

·       Registered corporate name and trading name

·       Addresses of the registered office and head offices

·       Telephone and fax numbers as well as email addresses

·       Board of directors members

·       People who are authorized to operate the account and act on behalf of the business

·       Beneficial owners

·       Registered shareholders who act as nominees of the beneficial owners

·       Economic profile

Verification might also require an assessment of the business’s corporate status.

Streamlined Verification for CySEC Compliance

CySEC compliance can pose complex verification challenges for organizations. Trulioo can help by combining an extensive network of data sources across Europe with local expertise that can help organizations calibrate their onboarding risk-based approach.

When organizations blend that data source coverage with services such as watchlist screening and adverse media checks, they create a holistic onboarding strategy that can lead to industry-leading verification rates.

The compliance challenges multiply when organizations verify businesses. But access to a vast data source network and cutting-edge technology can accelerate due diligence – from verifying sole proprietorships to unraveling complex ultimate beneficial ownership structures – on any company.

With full transparency on vetted sources and granular, easy-to-understand match rules, compliance teams can confidently meet CySEC requirements.

A full suite of in-house verification capabilities can give organizations that report to CySEC the flexibility to quickly and securely onboard any person or entity in the EU.

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