Compliance: Τhe way forward

Compliance: Τhe way forward


Βy Kyriakos Iordanou, General Manager, Institute of Certified Public Accountants of Cyprus,


During 2015 one of the terms that dominated our business vocabulary was the humble word “compliance”. This term is extremely relevant to 2016 onwards too. Compliance became an enormous issue for the whole business community and the government, mainly due to the requirements of the Troika. But is it something new, or have we kept it rather on a hibernating mode for too long?

If I were to attempt to provide a simple definition to the term compliance, I would say “adherence to the laws, rules and regulations that govern a specific activity and meeting all the obligations that this activity carries”. Quite simple and self-explanatory, yet apparently difficult to implement! I recall the very first encounters with Troika where it was stated that Cyprus was a champion in passing legislation but in fact not implementing them!

On a more academic and technocratic definition, compliance comprises of three basic components, being the prevention and suppression of money laundering and terrorist financing activities, corporate governance and regulatory compliance. The Anti-Money Laundering (AML) concept is one of the hottest issues on the international agenda and provides for the implementation of a series of measures to prevent such activities. Corporate governance calls for a set of procedures and measures to foster transparency and accountability together with a distinct allocation of roles, however it needs to be based on solid ethical and professional grounds. Regulatory compliance refers to the adherence to obligations under the legislation and other regulations, including for instance, prompt, complete and accurate submission of the annual declarations of income to the Tax Department, submission of the annual returns to the Registrar of Companies, the renewal of business/professional licensing etc.

Hence compliance, is a broader term encompassing many business activities such as the accountancy and legal profession, the banking industry, the regulation of investment firms, funds and listed companies, and other regulatory agencies in their fields.

Compliance generates comfort, confidence, respect and trust. Vital components for a country that aspires to be considered as a serious international business centre or a creditworthy entity.

After the predicament of 2013, where the reputation of the Country stroke a very low perception score, enhancing the compliance environment was the only way in order to regain trust and respect. This was evident in the Troika’s economic adjustment programme where a significant part referred specifically to AML. The country had to restore its reputation in order to remain above the “stormy waters”.

Three years down the road, I think that I can safely comment that there has been significant work done by those charged with the task of improving the compliance function in the country, rendering thus Cyprus as a vivid example for other countries especially in AML issues.

The Institute was at the forefront of this exercise from the very beginning. Our efforts expanded from the redrafting of internal Regulations, to issuing guidance and circulars to members, pushing for adherence to legislation (ie Tax laws and Companies’ Law), introducing new risk based approach models, assisting the government in a variety of areas, coordinating and cooperating with other competent authorities, as well as focusing on the training and support to the members. The model pursued by the Institute regarding compliance includes the following steps:

-Licensing, Guiding, Training, Supporting, Monitoring and Disciplining its members.

In the past three or more years, and having, in my capacity as the General Managers of ICPAC, undergone more than 20 evaluations and assessments by Troika, OECD and other international organisations during the last three years, I feel that as an Institute we have greatly contributed to the restoration of confidence to the country as far as AML activities and other regulatory compliance functions are concerned. I strongly believe that the Institute’s cooperation with ACCA for monitoring the accounting and audit firms and the fact that ICPAC had long before established specific procedures to tackle AML, were crucial factors that prevented more severe repercussions.

The compliance requirements will inevitably increase as time passes by, mainly regulatory compliance. The way is paved by the EU and OECD for that. The successful completion of the adjustment programme with Troika is by no means the end of the line, but rather the beginning of the new era, the Compliance Era. We need to ensure that there will be no repetition of the 2013 nightmare.



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