Banks in Cyprus must implement increased due diligence measures when conducting background checks on politically exposed persons, a Central Bank of Cyprus representative said on Wednesday.

Addressing the House ethics committee, the representative said the “most important” aim of such measures must be to verify the source of politically exposed persons’ assets and the nature of their bank accounts.

Additionally, the representative said, a new European framework to combat money laundering is set to enter force in 2027, with the stipulations of that framework expected to be transposed into all European Union member states’ national legislation.

The framework, known as the AML/CFT framework, is set to tighten EU-wide rules relating to money laundering and the financing of terrorism, with due diligence measures among the items which are set to be amended.

The European Commission will also create a new authority for anti-money laundering and countering the financing of terrorism, known as Amla, which will coordinate authorities across the bloc to ensure that the correct anti-money laundering processes are followed.

To this end, the Central Bank of Cyprus representative said on Wednesday that the bank has already “taken the initiative to create a common platform which will contain data on politically exposed persons from all banks”.

The creation of the database, the representative said, has “entered its final stage”, with work now underway to convince Cyprus’ banks to take part.

Data protection commissioner Irini Loizidou Nicolaidou told the committee that data updating procedures may differ between banks, and that work to ensure compliance with the new regulations has begun on her office’s part.

She added that the results of this effort will be communicated to the central bank.

Additionally, she said, new instructions may be given through the AML/CFT framework, while the framework, which was published in the European Union’s official journal in June, is currently being examined by her office.

Committee chairman and Disy MP Demetris Demetriou called on banks to “utilise technology” to be able to update their data in compliance with the new framework and also encouraged the central bank to continue with its creation of its own database.

Meanwhile, Akel MP Andreas Pasiourtides called for “practical ways to simplify the process and reduce bureaucracy” to be found.

Cyprus has already begun implementing parts of the new legislation to combat Money laundering, with the banning of cash transactions over the value of €10,000 the most notable such step made so far.

This law had to be passed in parliament twice after the originally-passed bill immediately banned such transactions, before President Nikos Christodoulides sent it back to parliament, pointing out that the AML/CFT framework does not stipulate such a ban until 2027.