Cyprus Prohibits Carrying Out Cash Transactions Over €10,000

On December 5, 2024, Cypriot House of Representatives adopted the draft bill which bans transactions of over €10,000 (or the equivalent sum in other currencies) done in liquid assets, such as cash, transferable securities, commodities used as highly liquid stores of value, and prepaid cards.

This is a step taken within the framework of combating money laundering and financing of terrorist activities. The proposed changes align with EU Regulation 2024/1624 and the European Union’s AML Directive, which contain regulations on high-risk sectors that involve cash transactions.

Key Provisions

◉ Cash transactions for goods, services, and real estate are limited to €10,000 or the equivalent in other currencies. Any transaction exceeding this threshold must be conducted using traceable financial methods.

◉ Cash is defined to include not just physical currency but also bearer negotiable instruments, high-value commodities, and prepaid cards.

◉ Breach of the new law is punished by penalties, including fines of up to 10% of the transaction amount. In the case of real estate transactions, individuals could face imprisonment for up to five years.

◉ The temporary suspension of the limitation may be applied in cases of force majeure, such as disruptions of work of electronic payment systems.

Commentary of the Parliament and Experts

The bill was initiated by DISY party member Dimitris Dimitriou, who informed that it is part of a broader strategy to instill control over financial flows in Cyprus, many of which cannot be traced. The bill strongly stresses on the importance of the introduction of the restriction of cash transactions as an AML measure as stipulated by the EU’s requirements and protection of Cyprus as a secure financial hub.

While the document was adopted by the absolute majority of MPs, some concerns were raised. It was pointed out that the law could create challenges for cash-dependent sectors and small businesses that may struggle with transitioning to digital payment systems. Some specialists also mention there may be increased operational costs and potential financial exclusion for individuals who rely heavily on cash transactions (for instance, those who have limited access to banking services).

It may be expected that the state will have to put in place government support programs or incentive plans for small enterprises to comply with the new limitations. Banks may have to consider development of additional mobile banking applications. New rules will also influence real estate businesses and consultants, as stricter record-keeping regulations will apply to them.

The bill is expected to come into effect once it is published in the official Gazette of the Republic.