Cyprus Bans Cash Transactions Over €10,000

In a significant move aimed at enhancing the transparency and integrity of financial transactions, the Republic of Cyprus has introduced a legal ban on cash transactions exceeding €10,000. This new legislative measure, recently passed by the Cypriot Parliament, brings the island’s legal framework in line with broader European Union (EU) anti-money laundering (AML) and counter-terrorist financing (CTF) standards. As Cyprus continues to position itself as a reputable international business and financial hub, this measure underscores the country’s commitment to combating illicit financial activities, ensuring that Cyprus-based companies and individuals alike adhere to stringent compliance standards.

The Legal Framework and EU Alignment

The newly enacted restriction on high-value cash transactions is rooted in ongoing reforms to Cyprus’ AML/CTF laws. These reforms are driven in large part by Cyprus’ obligations under EU legislation—namely the 4th and 5th EU Anti-Money Laundering Directives (Directive (EU) 2015/849 and Directive (EU) 2018/843), as well as subsequent EU-level initiatives intended to curb the flow of illegal funds. The Republic of Cyprus implements its AML/CTF framework primarily through the “Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007 (N.188(I)/2007)” as amended, which is regularly updated to reflect evolving EU standards and Financial Action Task Force (FATF) recommendations.

The recent parliamentary decision, announced in December 2024, explicitly prohibits cash payments exceeding €10,000 in a wide range of transactions, including those involving goods and services across diverse economic sectors. While such prohibitions have long been on the EU’s radar, Cyprus’ formal adoption into its domestic legal order demonstrates a firm commitment to meeting and surpassing EU benchmarks. This ensures that any company or individual operating within Cyprus’ jurisdiction is subject to a uniform standard, thereby minimising the risk of money laundering, tax evasion, and other financial crimes.

Scope and Applicability of the Restrictions

Under the newly enacted regime, all physical cash transactions that surpass the €10,000 threshold are now illegal with fines of up to 10% of the amount of the transaction. In the case of real estate transactions, in addition to fines, the court may impose a prison sentence of up to five years.

This threshold applies to transactions involving both the sale and purchase of goods or services, regardless of whether the parties are natural or legal persons. The restriction covers a spectrum of industries, from high-end real estate deals and luxury vehicle sales to the purchase of precious metals, artworks, and other valuable assets. Simply put, any exchange of tangible currency that exceeds the €10,000 limit is disallowed.

Moreover, this ban does not only affect domestic businesses catering to local clients. International investors, overseas buyers, and expatriates engaging in the Cypriot market must also comply. Businesses that have historically transacted significant amounts of cash, such as certain retail sectors or high-value dealers, must adapt their operations accordingly. Non-compliance can lead to substantial penalties, reputational damage, and possible criminal implications.

Identifying When the Rule Applies

A transaction is considered above the threshold if:

1. The cash portion alone exceeds €10,000 in a single payment, or
2. Multiple smaller cash payments are clearly linked and collectively exceed €10,000 (sometimes referred to as “smurfing” or “structuring” to evade detection).

Example: If a client wants to buy a high-end watch for EUR 12,000 in cash, the seller must refuse cash above the €10,000 threshold. They could legally accept €10,000 in cash and the remaining €2,000 by card or bank transfer, provided all AML checks are satisfied.

Implications for Companies and Professionals

For companies operating in Cyprus, this new measure necessitates careful review and adjustment of their transaction and record-keeping practices. For instance:

1. Transitioning to Alternative Payment Methods:
   Companies are now encouraged to rely on digital banking solutions, bank drafts, credit transfers, or other traceable payment instruments. This shift ensures an auditable financial trail, making it easier for authorities to scrutinise financial flows and detect suspicious activity.
2. Revisiting Internal Compliance Policies:
   Cyprus-based companies should update their internal AML/CTF manuals, staff training protocols, and client due diligence procedures. Enhanced internal controls will help businesses avoid inadvertently breaching the cash transaction limit and ensure full compliance with the revised framework.
3. Increased Collaboration with Financial Institutions:
   Financial institutions in Cyprus are already subject to stringent AML/CTF obligations. Close coordination with banks, payment providers, and other financial intermediaries will help companies adjust their transaction methods while maintaining efficient commercial operations.
4. Audits and Reporting:
   The new legislative environment emphasizes transparency. Companies should expect increased regulatory scrutiny and possibly more frequent audits to ensure adherence. Robust record-keeping of all high-value transactions (whether cash or not) will be critical, enabling businesses to demonstrate compliance swiftly and conclusively.

Penalties and Enforcement Mechanisms

Non-compliance with the new cash transaction ban can result in substantial fines, operational restrictions, or more severe penalties depending on the severity and intent. The exact sanctions are set forth in amendments to the AML Law and other relevant legal instruments, ensuring that enforcement authorities such as the Unit for Combating Money Laundering (MOKAS) and other supervisory bodies have clear mandates to act.

In line with standard AML enforcement practices, companies and individuals found to be wilfully circumventing these rules e.g., structuring payments just below the threshold to evade detection, risk facing enhanced scrutiny, potential criminal charges, and damage to their business reputation.

Best Practices for Compliance and Risk Management

To navigate the evolving regulatory landscape, businesses and professionals can consider the following best practices:

1. Legal Consultation:
   Regular consultation with experienced legal professionals specialising in AML/CTF law can help interpret the new obligations, identify compliance gaps, and suggest corrective measures.
2. Implementing Robust Compliance Systems:
   Deploying advanced compliance software to monitor transaction patterns, flag suspicious activity, and generate compliance reports can save time and mitigate risk. Integrating these systems into company workflows ensures ongoing adherence and readiness for regulatory reviews.
3. Comprehensive Employee Training:
   Staff members who handle financial transactions must be informed of the new restrictions, equipped to recognise potential red flags, and instructed on the correct escalation procedures when encountering unusual payment requests.
4. Continuous Monitoring of Regulatory Updates:
   As the legal environment continues to evolve in line with international best practices, staying informed about new legislative changes, EU directives, or FATF recommendations will allow companies to remain compliant and competitive.

Conclusion

The ban on cash transactions exceeding €10,000 represents a decisive step in Cyprus’ ongoing campaign against money laundering and other financial crimes. By mandating traceable, regulated forms of payment for high-value transactions, this measure significantly reduces the risk of illicit activities, enhances the island’s international credibility, and protects honest businesses and consumers alike. Aligning with EU AML/CTF standards ensures that Cyprus remains a trustworthy environment for investment, while granting companies the clarity and legal certainty they need to thrive in an increasingly transparent and compliance-driven global market.

As companies adapt to these changes, legal counsel and diligent compliance efforts will be paramount. The new rules serve as both a protective barrier against financial misconduct and an opportunity for businesses operating in Cyprus to demonstrate their commitment to ethical, transparent, and fully compliant financial practices, safeguarding their reputation and long-term success.