CySEC Slams Investment Firms with €2.2M Fines in 2023

The Cyprus
Securities and Exchange Commission (CySEC) carried out over 700 on-site and
remote inspections of supervised entities in 2023 and issued over $2.2 million in fines. These thematic audits aimed
to ensure compliance with regulations and protect investors.

CySEC also
conducted remote checks on investment firms affected by the Russia-Ukraine
sanctions, assessing business relationships with sanctioned individuals and
investigating forced transfers of Russian securities.

The Market
Surveillance and Investigations Department completed 42 investigations, with 48
more ongoing at the end of the year. One case was referred to the Attorney
General for potential criminal offenses.

As a result
of the supervisory audits, CySEC imposed administrative sanctions totaling
approximately €2.2 million in 2023, with €1 million levied on a single
investment firm. Over the past three years, €6 million in sanctions have been
imposed, with €5.3 million on investment firms for regulatory breaches.

For comparison, the British FCA, in the same period, cancelled 1,266 unauthorized firms and issued record fines totaling £52,802,900. The record holder in this regard remains the USA, where the SEC and CFTC together imposed financial penalties exceeding $9 billion.

Additionally,
supervised entities were instructed to take corrective measures in 103 cases,
and 35 entities were ordered to comply with anti-money laundering and
counter-terrorist financing laws within a specific timeframe. CySEC also
revoked or suspended the operating licenses of 19 investment firms and two
collective investment undertakings.

In the latest exclusive interview with Finance Magnates, CySEC Chairman Dr. George Theocharides highlighted that currently one of the most important regulatory issues remains cryptocurrencies and artificial intelligence, which is a game-changer for the entire industry.

“The reality is that while AI can transform the securities market by improving efficiency, increasing accuracy and reduce costs, it is still in its relative infancy,” Theocharides commented. “We are only starting to scratch the surface of how AI can enhance our capacity to innovate and interact with the market. That’s why building trust is going to be an essential element to its broad adoption.”

Preparing for MiCA and
Sector Growth

Theocharides highlighted the upcoming Markets in Crypto-Assets Regulation (MiCA) implementation as a significant regulatory change
expected by the end of 2024. MiCA aims to ensure investor protection and market
integrity in the crypto-asset sector.

The CySEC Chairman urged supervised entities to prepare for MiCA’s adoption by
acquiring appropriate systems and staffing to meet the new requirements. He
also cautioned investors about the risks associated with crypto-assets.

Despite
challenges in the financial environment, the capital market in Cyprus remains
attractive, with 82 new entities approved in 2023, bringing the total number of
supervised entities to 830 by the end of February 2024.

“Over the past four years, the number of
supervised entities has recorded a 12% increase and is an indication that
Cyprus continues to gather substantial advantages as an investment destination,” Theocharides added.

Investor Education and
Financial Literacy

In 2023,
CySEC actively participated in events, workshops, and conferences to promote
financial literacy and education. The commission is also a member of the Ad-Hoc
Committee formulating a National Strategy for Financial Literacy and Education
in Cyprus.

CySEC
issued warnings to the public about entities posing as CySEC officials or
representatives and websites imitating supervisory authorities.

The Cyprus
Securities and Exchange Commission (CySEC) carried out over 700 on-site and
remote inspections of supervised entities in 2023 and issued over $2.2 million in fines. These thematic audits aimed
to ensure compliance with regulations and protect investors.

CySEC also
conducted remote checks on investment firms affected by the Russia-Ukraine
sanctions, assessing business relationships with sanctioned individuals and
investigating forced transfers of Russian securities.

The Market
Surveillance and Investigations Department completed 42 investigations, with 48
more ongoing at the end of the year. One case was referred to the Attorney
General for potential criminal offenses.

As a result
of the supervisory audits, CySEC imposed administrative sanctions totaling
approximately €2.2 million in 2023, with €1 million levied on a single
investment firm. Over the past three years, €6 million in sanctions have been
imposed, with €5.3 million on investment firms for regulatory breaches.

For comparison, the British FCA, in the same period, cancelled 1,266 unauthorized firms and issued record fines totaling £52,802,900. The record holder in this regard remains the USA, where the SEC and CFTC together imposed financial penalties exceeding $9 billion.

Additionally,
supervised entities were instructed to take corrective measures in 103 cases,
and 35 entities were ordered to comply with anti-money laundering and
counter-terrorist financing laws within a specific timeframe. CySEC also
revoked or suspended the operating licenses of 19 investment firms and two
collective investment undertakings.

In the latest exclusive interview with Finance Magnates, CySEC Chairman Dr. George Theocharides highlighted that currently one of the most important regulatory issues remains cryptocurrencies and artificial intelligence, which is a game-changer for the entire industry.

“The reality is that while AI can transform the securities market by improving efficiency, increasing accuracy and reduce costs, it is still in its relative infancy,” Theocharides commented. “We are only starting to scratch the surface of how AI can enhance our capacity to innovate and interact with the market. That’s why building trust is going to be an essential element to its broad adoption.”

Preparing for MiCA and
Sector Growth

Theocharides highlighted the upcoming Markets in Crypto-Assets Regulation (MiCA) implementation as a significant regulatory change
expected by the end of 2024. MiCA aims to ensure investor protection and market
integrity in the crypto-asset sector.

The CySEC Chairman urged supervised entities to prepare for MiCA’s adoption by
acquiring appropriate systems and staffing to meet the new requirements. He
also cautioned investors about the risks associated with crypto-assets.

Despite
challenges in the financial environment, the capital market in Cyprus remains
attractive, with 82 new entities approved in 2023, bringing the total number of
supervised entities to 830 by the end of February 2024.

“Over the past four years, the number of
supervised entities has recorded a 12% increase and is an indication that
Cyprus continues to gather substantial advantages as an investment destination,” Theocharides added.

Investor Education and
Financial Literacy

In 2023,
CySEC actively participated in events, workshops, and conferences to promote
financial literacy and education. The commission is also a member of the Ad-Hoc
Committee formulating a National Strategy for Financial Literacy and Education
in Cyprus.

CySEC
issued warnings to the public about entities posing as CySEC officials or
representatives and websites imitating supervisory authorities.

2.2MCySECFinesfirmsinvestmentSlams
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