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Directorate of Financial Services

Economic Director: Avgi Chrysostomou-Lapathiotis


 1. Introduction

The Directorate of Financial Stability's main mission is to handle the whole regulatory spectrum of the economy's financial sector, i.e., banking, capital market, and insurance companies, with the aim of alignment to the EU acquis communautaire, modernization, development, or enhancement of best practices. The ultimate objective is to continuously monitor the financial sector and contribute, together with the supervisory authorities, to ensuring financial stability.

2. Banking Sector

It is essential to support a well-regulated, effectively supervised, competitive, and stable banking sector that protects the interests of consumers and small and medium-sized enterprises.

The main activities of the Directorate in the banking sector focus on the following:

  • Coordination and promotion of legislation for the entire regulatory framework of the banking sector, both at the European and national levels.
  • Monitoring the level of non-performing loans (NPLs) and coordinating actions to reduce them in cooperation with the CBC.
  • Εstablishment of national legislation within the framework of Cyprus' Recovery and Resilience Plan to ensure financial stability (amendment of the national framework for the insolvency of credit institutions and creation of a national framework for dealing with crises in the banking sector).
  • Monitoring developments, qualitative and quantitative indicators of the financial sector.
  • Work relating to the state ownership structure of entities in the financial sector (SEDIPES/KEDIPES and the Housing Finance Organization)
  • Monitoring issues related to the consequences of the imposition of reorganization measures (cases for dispute resolution in International Arbitration Courts, appeals in Regional Tribunals).

3. Capital Market Sector

The capital market plays a crucial role in transferring financial resources, providing finance to businesses and start-ups, generating sufficient specialization in this economic sector, and providing growth by offering services both in Cyprus and abroad. 

The main activities of the Financial Services Directorate in this area include the following: 

  • Reform and enhancement of the regulatory framework of the capital market sector, in cooperation with other supervisory authorities, based on the Community acquis and best practices in the context of sustainable development.
  • Promotion of new legislation and amendments to existing legislation to further develop the capital market, investment funds, and the proper functioning of the Cyprus Stock Exchange and the Capital Market.

4. Financial Stability

Financial stability includes monetary stability, financial stability on the issue of payment systems, and the orderly functioning of financial markets in which markets function smoothly during significant shocks. 

Within the context of ensuring financial stability, the main activities of the Directorate are the following:

  • Monitoring the financial sector according to efficiency indicators to maintain financial stability (capital, liquidity, solvency ratios of financial institutions, NPLs, etc).
  • Participation in the Financial Stability Assurance Committee, chaired by the CBC and involving financial sector supervisors. 

5. Combating Money Laundering and Terrorism Financing

Money laundering and terrorist financing negatively affect a country's financial system and undermine stability. Therefore, it is essential for Cyprus, as a small, open economy, to be actively involved in preventing the use of its financial system for criminal activities.

Cyprus plays a leading role in developing policies for anti-money laundering and financing terrorism at the international level. 

To achieve the above target, the main activities of the Directorate focus on the following: 

  • Chairmanship of the Advisory Authority for Anti-Money Laundering and Terrorist Financing (an advisory body to the Council of Ministers on issues related to money laundering and terrorist financing -ML/TF). This Authority comprises the relevant Ministries and Departments, the supervisory authorities, and private sector entities.
  • The Directorate is also involved in policy issues regarding dissuasive and enforcement measures in the financial sector, including legislative measures.
  • Supporting the operations of the assessment of Cyprus by the Council of Europe's MONEYVAL Committee, the Global Forum of the OASA on tax transparency and exchange of tax information, and the evaluation of Cyprus for the United Nations Convention against Corruption on issues related to measures against ML/TF.

6. International Financial Institutions

The main International Financial Institutions within the scope of responsibilities of the Directorate are the following:

  • European Investment Bank
  • Council of Europe Development Bank
  • European Bank for Reconstruction and Development
  • World Bank (and subsidiary organisations)
  • International Monetary Fund
  • Asian Investment and infrastructure Bank 

Main Directorate concerns are as follows:

  • Monitoring and handling issues of International Financial Institutions.
  • Foresting of Cyprus' relations and cooperation with international organisations.
  • Representing the Ministry of Finance in International Financial Institutions.
  • Monitoring of financing of development projects from international financial sources.

7. Sanctions Implementation

The Law on the Implementation of the Provisions of United Nations Security Council Resolutions or Decisions (Sanctions) and Council of the European Union Decisions and Regulations (Restrictive Measures) of 2016 (58(I)/2016), governs the implementation of sanctions in the Republic of Cyprus.

Based on the Decision by the Council of Ministers (no 93.265), the Ministry of Finance assumed the role of coordinator for the implementation of the sanctions. In this context, it has been authorized, among other things, to:

a)       Receive information on the measures taken by the competent authorities of the Republic of Cyprus by Law 58(I)/2016 to ensure the implementation of the sanctions and restrictive measures within its field of competence.

b)      Gather information and data on the (asset-freezing) measures in the Republic of Cyprus.

c)       Transmit information to the Advocate General on the possible commission of criminal offenses related to the violation of sanctions by EU and third-country authorities.

d)      Forward inquiries received from foreign authorities relating to implementing sanctions to the competent authorities of the Republic of Cyprus.

    1. Advisory Committee on Economic Sanctions (SEOK)

The Commission examines, among others, the requests,

(α) by credit institutions (for their customers, natural or legal persons) listed in Annex I of Council Regulation (EU) No 269/2014 and the recent Regulations amending it, for the exclusion and release of specific frozen resources or funds, under conditions.

(b) by financial services professionals to authorize the provision of services to persons or entities affected by the application of UN Security Council economic sanctions and European Union restrictive measures.

(c) concerning the incorrect freezing of funds in credit institutions.

(d) for derogation from the European Union's restrictive measures regarding accepting deposits over €100,000.

       2. Sanctions Implementation Unit (ΜΕΚ)

Examines requests submitted by interested persons (e.g., Cypriot citizens, companies, law/auditing firms, and financial institutions) regarding authorizations/approvals provided for by the relevant UNSC resolutions and EU regulations concerning financial matters.

More details can be found through the links below:

Sanctions adopted following Russia’s military aggression against Ukraine


8. Policy for the handling of personal data by the Financial Services Directorate in relation to borrower complaints about Banking Institutions, Credit Acquisition Companies or Credit Facility Management Companies

parapona-daneiolipton-sxetika-me-pist-idrimata.pdf (mof.gov.cy)

The Directorate also has the following committees:

Contact Details: 

Maria Eftymiou

Tel.: +357 22601172 

Email: mefthymiou@papd.mof.gov.cy 

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