The Cyprus Securities and Exchange Commission (CySEC) has warned board members of Cyprus Investment Companies (CIF) that they have a responsibility to improve their own performance, promote a culture of integrity and high ethical standards after regulatory actions revealed loopholes in compliance.。

The Cyprus Securities and Exchange Commission (CySEC) has issued a series of warnings to the industry after introducing stricter regulatory measures.。

Dr. George Theocharides, chairman of the CySEC, stressed that CIFs who do not comply with the regulatory framework will not be tolerated.。

"Cyprus is open to businesses, but only to those that consider the best interests of their customers and always meet regulatory requirements.。"It's the foundation of a healthy, strong market," he said..New products and services incorporate financial technology and innovation。"

Dr. Theocharides elaborated on CySEC's expectations and the current regulatory environment in Europe during an online seminar for CIF Board members, highlighting regulatory compliance and investor protection.。

Outlining the actions taken by the European Securities and Markets Authority (ESMA) and CySEC to further strengthen the regulation of cross-border retail financial services, he said: "There will be more restrictions in the future and only companies with a strong compliance culture can survive in this stringent regulatory environment.。

Dr Theocharides also added:

"CySEC takes any misconduct by regulated entities seriously and is confident that investor protection and market integrity will be enhanced through rigorous regulation and ongoing monitoring."。For this reason, CySEC is determined to stop illegal operations. "。

He also added that the provision of cross-border services, particularly high-risk products to retail customers, continued to raise significant concerns in terms of investor protection.。The rapid digitalization of financial services and the increasing use of social media to promote investment have provided retail investors with easy access to financial products that may exhibit different risk characteristics that are not fully understood by all retail investors。

Over the past three years, the CySEC has imposed fines of up to €5.3 million on CIF for violations of the Investment Services and Activities and Regulated Markets Act 2017, including €1 million for one company alone.。

Among the stricter enforcement and regulatory measures introduced by CySEC are the potential personal liability of key persons found responsible for CIF violations, and there are multiple administrative procedures for natural persons.。CySEC has also taken measures to deny applications for CIF licences, revoke licences and revoke licences until specific actions are taken to remedy deficiencies or omissions identified in the supervision and inspection.。

Under its annual regulatory action plan, CySEC conducted desk and thematic reviews of CIF and conducted on-site inspections, while its Anti-Money Laundering / Combating the Financing of Terrorism Unit conducted further inspections to assess the adequacy of specific measures and procedures implemented by regulated entities.。These inspections include review of compliance reports and internal audit。

Dr Theocharides told committee members:

“We urge you to consider the issues raised today in relation to your responsibilities as members of the CIF Board and to take immediate action to ensure that you respond and fulfil your responsibilities.。No longer tolerable and / or grace period for companies with violations。”

He added: "Implementing effective regulation within regulated entities and further strengthening strong compliance functions is one of CySEC's highest objectives.。"

CySEC currently regulates 838 entities, of which 250 are investment companies (2023), compared to 248 in 2022 and 243 in 2021.。Of these, 159 companies offer foreign exchange products (CFDs) to retail investors and 90 offer traditional products.。