Most people picture a suspicious transaction report as something you send to MOKAS. In Cyprus you almost certainly do not send it. You report to one named officer inside your own firm, and that officer reports onward. The duty that stays with you is silence.
That routing is statutory, not supervisory. Section 69 of L.188(I)/2007 is where the internal reporting procedures live, and an accountant supervised by ICPAC and a lawyer supervised by the Bar Association take the identical duty from it. Their directives, each issued under section 59(4) of the same Law, tell their own members how to do the work. The operative text is Greek, no official English version of the Law exists, and the renderings here are ours.
The heading of section 69 reads: internal reporting procedures and reporting to MOKAS. It is the only place in the whole Law where the acronym appears. Everywhere else, including in section 69 itself, the recipient is the Unit, defined in section 2 as the Unit for Combating Money Laundering and Financial Intelligence Unit, established under section 54.
The officer first
Section 69(a) requires obliged entities to appoint a senior management executive who possesses ability, knowledge and expertise, as compliance officer, to whom the report is to be made of any information or other matter which comes to his attention and which, in his opinion, proves or creates suspicion that another person is involved in money laundering or terrorist financing offences. Two limbs, not one: proves, or creates suspicion.
Section 69(b) requires that any such report is examined in the light of all the relevant information by the compliance officer. Section 69(c) is what makes that possible: direct and timely access to other information, data and documents which may assist him and which are available to the person carrying out the financial or other activities. An officer who can only see what was attached to the report cannot do what (b) asks.
What goes to the Unit, and when
Section 69(d) sets the trigger. When they know or have reasonable suspicions that monetary sums, irrespective of their amount, constitute proceeds from illegal activities or are related to terrorist financing, obliged entities ensure that the Unit is informed immediately, on their own initiative, by the compliance officer referred to in paragraph (a), by submitting a relevant report and providing supplementary information following a request from the Unit. A proviso follows: the obligation to report suspicious transactions to the Unit includes also an attempt to carry out such suspicious transactions.
Plainly: no threshold amount, no waiting to be asked, one route out, and a transaction that never completed still counts. Section 69(d1) adds that all requested information goes to the Unit without delay.
Why it is still your problem
Section 27 makes the failure a personal offence. A person who knows, or has reasonable suspicion, that another person is involved in those offences, and whose knowledge or suspicion rests on information that reached him during his employment, profession or business falling within the obliged entities defined in section 2A, commits an offence if he does not disclose it to the Unit after it comes to his attention, when that is reasonably possible. Failure to disclose information that came to a lawyer's knowledge and is privileged is not an offence, and a reasonable explanation or excuse for not disclosing is a defence.
Where the two meet
Section 26(3) is the join. Where a person is at the material time employed by another whose business is supervised by one of the Authorities established under section 59, subsections (1) and (2) of section 26 apply to disclosures, or intended disclosures, made to the compliance officer referred to in section 69 in accordance with the procedure the employer has established, and those disclosures have the same consequence as disclosures to the Unit.
In plain terms: report internally, the way your firm has set it up, and the Law treats you as having reported, for the defence and the protection section 26 gives. Section 69A adds that a good-faith disclosure under section 69 breaches no contractual, legislative, regulatory or administrative prohibition on disclosure and gives rise to no liability, even where the circumstances did not allow the discloser to know exactly what the underlying illegal activity was, and whether or not illegal activity was in fact committed. Section 69B protects the reporter from threats, reprisals and hostile acts, and in particular from adverse or discriminatory treatment at work.
Both supervisors go further than section 26(3), in almost the same words. ICPAC says that once an employee reports his suspicion to the compliance officer, he is considered to have fully satisfied his statutory obligations as far as reporting suspicious transaction and activity reports are concerned. The Bar Association says the same at its paragraph H.1.2. Note the distance. Section 26(3) confers that consequence within section 26; section 27 on its face names the Unit. The supervisors close the gap. The Law does not close it for you.
Stop the transaction, then report
Section 70 says what happens meanwhile, and the modal changes halfway through. Obliged entities avoid carrying out transactions they know or suspect are connected with money laundering or terrorist financing offences before reporting their suspicion to the Unit under sections 27 and 69. Then the proviso: if avoidance is impossible, or might hinder the prosecution of the persons for whose benefit the suspected laundering or financing is being carried out, they are to inform the Unit immediately after the transaction. Avoid is stated as a fact. Inform afterwards is stated as an ought.
What nobody may do while this runs
Section 48(1). An obliged entity, a director or an employee of it does not disclose to the customer concerned or to a third person the fact that information relating to suspicious transactions was transmitted, is being transmitted or will be transmitted to the Unit under section 69, or that an analysis of such information or of such suspicious transactions is being conducted or may be conducted.
Three tenses on the report, and an analysis that is or may be running. Telling a client you have filed is one of five things that sentence forbids, and it is not the easiest one to do by accident.
Section 48(2) is wider and reaches anyone: no person may make a disclosure that could hinder or adversely affect interrogations and investigations conducted in relation to the ascertainment of proceeds or the commission of prescribed offences, while he knows or suspects those investigations are being conducted. The proviso in the same subsection matters as much. Where a person exercising the professional activity of auditor, external accountant or independent legal professional attempts to dissuade a client from becoming involved in illegal activity, that is not deemed disclosure within the meaning of the section. Warning a client off a crime is not tipping off.
Section 49 carves out exceptions, among them disclosure within a group, between people of the same professional category in a shared structure, between obliged entities on the same client and the same transaction, and to the supervisory authorities or for law enforcement. Each carries conditions of its own.
Failing to disclose under section 27 is punishable by up to two years, or a fine not exceeding five thousand euro, or both. Tipping off under section 48(3) is punishable by up to two years, or a fine not exceeding fifty thousand euro, or both. The same maximum prison term either way. The fine for talking to the client is ten times the fine for not talking to the Unit.
What the supervisors add
Procedure, and much the same procedure on both sides. Both tell firms to put a paragraph in the engagement letter notifying clients of the firm's potential reporting obligations under the Law. Both tell the compliance officer to acknowledge receipt of an internal report and, at the same moment, remind the reporter of the duty not to tip off. Both say it is never appropriate to delay a disclosure to MOKAS pending an application to the court for directions. ICPAC adds a case the statute does not describe: where completing client due diligence would itself commit the tipping-off offence, the firm may not conclude it, and immediately notifies MOKAS through a suspicious activity report.
ICPAC also renders the onward report as something the compliance officer should do, upon conclusion of the examination and if needed, where section 69(d) states it as a fact the firm ensures. The supervisor's modal is the softer of the two.
FATF's assessment methodology, whose criteria are addressed to countries and assessors rather than to firms, is where both halves come from: criterion 20.2, report all suspicious transactions including attempted ones regardless of amount; criterion 21.2, prohibit by law any disclosure of the fact that a report is being filed. On the face of both texts section 48 reaches wider, to a report already sent, one still to come, and an analysis that might never happen.
Filing is the part with a form, a platform and a named officer to do it. The other duty has no form at all. It is everything you do not say, to the client and to anyone else, for as long as it runs. Hand it up, and then say nothing.
Not legal advice. Verify against the primary source before acting.
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