100+ Free CySEC Basic Practice Questions

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Key Facts: CySEC Basic Exam

70%

Passing Score

CySEC

Exam Questions

CySEC

60 min

Exam Duration

CySEC

€200

Exam Fee

CySEC

10 hrs

Annual CPD Required

CySEC

100

Practice Questions

OpenExamPrep

The CySEC Basic Certification is the foundational credential for client-facing, marketing, and operational professionals in Cyprus Investment Firms (CIFs). It tests knowledge across the Cyprus Investment Services Law, UCITS/AIF fund structures, and AML prevention laws.

Sample CySEC Basic Practice Questions

Try these sample questions to test your CySEC Basic exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under Law 87(I)/2017, which of the following is classified as an investment service rather than an ancillary service?

A.Safekeeping and administration of financial instruments for the account of clients

B.Portfolio management

C.Granting credits or loans to an investor to allow him to carry out a transaction

D.Foreign exchange services where these are connected to the provision of investment services

Explanation: Portfolio management is classified as an investment service under Law 87(I)/2017. Safekeeping, granting credits/loans, and foreign exchange are classified as ancillary services. Ancillary services do not require full licensing if not provided in conjunction with investment services, but a CIF must be authorized to offer them.

2Which of the following services requires authorization from CySEC under Law 87(I)/2017 when provided to clients?

A.Investment advice

B.Commercial banking deposit accounts

C.Insurance mediation for life policies

D.Real estate brokerage and property valuation

Explanation: Investment advice is a regulated investment service under Law 87(I)/2017 that requires authorization from CySEC. Commercial banking, insurance mediation, and real estate brokerage are governed by separate regulatory bodies and legislation in Cyprus. Providing investment advice without CySEC authorization is a criminal offence.

3CySEC has the power to impose administrative fines on a Cypriot Investment Firm (CIF) that violates Law 87(I)/2017. What is the primary purpose of these administrative powers?

A.To generate revenue for the national budget of Cyprus

B.To enforce compliance, protect investors, and maintain market integrity

C.To replace the judicial court system for criminal prosecutions

D.To establish monetary policies and control inflation in Cyprus

Explanation: CySEC's administrative powers are designed to enforce regulatory compliance, safeguard investor interests, and ensure market integrity. These penalties act as deterrents against non-compliance with Law 87(I)/2017. CySEC does not act as a criminal court, and its primary objective is not state revenue generation or monetary policy control.

4A person who provides investment services in Cyprus without the required authorization from CySEC is committing a criminal offence. What is the maximum penalty upon conviction under Law 87(I)/2017?

A.An administrative warning and a public reprimand only

B.Imprisonment for a term not exceeding 5 years, a fine not exceeding €700,000, or both

C.A fixed penalty of €50,000 with no possibility of imprisonment

D.Imprisonment for life and complete confiscation of all personal assets

Explanation: Under Law 87(I)/2017, providing investment services without authorization is a serious criminal offence. Upon conviction, the offender is liable to imprisonment for a term not exceeding 5 years, a fine not exceeding €700,000, or both. This penalty reflects the severity of operating an unlicensed financial business and protects the financial sector from illegal operators.

5What is the key structural difference under Law 87(I)/2017 between a Multilateral Trading Facility (MTF) and an Organized Trading Facility (OTF)?

A.An MTF allows for discretionary execution of orders, whereas an OTF operates strictly on non-discretionary rules

B.An OTF allows for discretionary execution of orders by the operator, whereas an MTF operates strictly on non-discretionary rules

C.Only retail clients are allowed to trade on an MTF, while only professional clients can trade on an OTF

D.An MTF is regulated by the Central Bank of Cyprus, while an OTF is regulated by CySEC

Explanation: An OTF allows the platform operator to exercise discretion in execution (e.g., when placing or retracting orders), whereas an MTF must operate on a non-discretionary basis where transactions are matched strictly by predefined rules. Both platforms serve as multilateral trading venues, but the introduction of operator discretion is unique to the OTF category under MiFID II / Law 87(I)/2017. Both MTFs and OTFs are regulated by CySEC.

6What is the relation between Cyprus Law 87(I)/2017 and European Union legislation?

A.Law 87(I)/2017 transposes the European Union's MiFID II Directive into Cyprus national law

B.Law 87(I)/2017 transposes the European Union's AIFMD into Cyprus national law

C.Law 87(I)/2017 replaces all European Union regulations in Cyprus with local legislation

D.Law 87(I)/2017 transposes the European Union's 5th Anti-Money Laundering Directive

Explanation: Cyprus Law 87(I)/2017 was enacted to transpose the EU's Markets in Financial Instruments Directive II (MiFID II) into national legislation. It provides the statutory framework for investment services, CIFs, and regulated markets in Cyprus. AIFMD and AML Directives are transposed via other specific Cyprus laws (e.g., AIF Law of 2018 and AML Law 188(I)/2007).

7If a corporate entity commits a criminal offence under Law 87(I)/2017, which of the following statements regarding the liability of individual directors is correct?

A.Only the corporate entity is liable; individual directors have absolute immunity

B.Any director or officer who authorized, consented to, or facilitated the offence can be prosecuted and held personally liable

C.Only the compliance officer can be prosecuted, while directors are exempt from criminal liability

D.Directors are only liable if they own more than 50% of the company's shares

Explanation: Under Cyprus financial regulatory law, corporate criminal liability does not shield individual executives. Any director, manager, or officer of the corporate entity who authorized, consented to, or facilitated the commission of the offence can be prosecuted and held personally liable alongside the corporation. This ensures accountability at the governance level.

8Under what circumstance can a firm in Cyprus provide ancillary services, such as safekeeping of financial instruments, without holding a CySEC license for investment services?

A.If the firm only provides the ancillary services to professional clients

B.Firms cannot provide ancillary services on a professional basis without being authorized to provide at least one investment service

C.If the firm is registered with the Cyprus Chamber of Commerce and Industry

D.If the total value of client assets under safekeeping is less than €1,000,000

Explanation: Under Law 87(I)/2017, ancillary services do not grant a standalone right to authorization. A firm cannot obtain a license from CySEC solely for ancillary services; it must be authorized to perform at least one core investment service. Once licensed, the CIF may then offer ancillary services as specified in its authorization.

9What is the initial capital requirement for a Cypriot Investment Firm (CIF) that provides reception and transmission of orders and/or investment advice, but does NOT hold client money or financial instruments?

A.€75,000

B.€125,000

C.€150,000

D.€750,000

Explanation: A CIF that provides only non-custodial services (such as reception, transmission, or investment advice) and does not hold client assets has an initial capital requirement of €75,000. If the firm is permitted to hold client funds, the requirement rises to €150,000. If it deals on own account or underwrites, the requirement is €750,000.

10What is the initial capital requirement for a Cypriot Investment Firm (CIF) authorized to perform dealing on own account or underwriting of financial instruments?

A.€150,000

B.€300,000

C.€500,000

D.€750,000

Explanation: CIFs that deal on own account, underwrite financial instruments, or operate a Multilateral Trading Facility (MTF) carry the highest risk profile. Consequently, their minimum initial capital requirement is set at €750,000. This capital must be maintained at all times to absorb potential trading and operational losses.

About the CySEC Basic Exam

The CySEC Basic Certification validates a fundamental understanding of the Cyprus and EU financial regulatory framework. It covers the Investment Services Law, CIF licensing and operation, UCITS, AIFs, and AML directives, and is aimed at retail marketing, receptionist, and customer service staff.

Questions

50 scored questions

Time Limit

60 minutes

Passing Score

70%

Exam Fee

€200 (Cyprus Securities and Exchange Commission (CySEC))

CySEC Basic Exam Content Outline

20%

Legislative Framework & CySEC

Role and powers of CySEC, administrative penalties, administrative procedures, investment and ancillary services scope.

30%

CIF licensing, Organization & Conduct

Licensing requirements, governance, organizational requirements, client asset segregation, Investor Compensation Fund (ICF), and conduct of business.

25%

Collective Investment Schemes

UCITS setup, management companies, depositary oversight, investment limitations, AIF structures, RAIF rules, and AIFM obligations.

25%

AML & Terrorist Financing Prevention

Cyprus prevention laws, risk-based approach, CDD levels (simplified, standard, enhanced), PEP definitions, suspicious transactions (MOKAS), and record keeping.

How to Pass the CySEC Basic Exam

What You Need to Know

Passing score: 70%
Exam length: 50 questions
Time limit: 60 minutes
Exam fee: €200

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

CySEC Basic Study Tips from Top Performers

1Memorize capital requirements: €75k for advice/RTO only (no client funds), €150k for holding client funds without underwriting, €750k for full services.

2Remember key transaction thresholds: AML standard CDD applies to occasional transactions of €15,000+ (€10,000+ in cash for goods, €2,000+ for casino).

3Master the UCITS investment rules: A UCITS can invest a max of 10% in securities of one issuer, and the total value of holdings where it invests over 5% cannot exceed 40% of its assets.

4Review the role of the compliance officer and the annual board reporting requirements.

Frequently Asked Questions

What is the passing criteria for the CySEC Basic exam?

The exam consists of 50 multiple-choice questions. Candidates must answer at least 35 questions correctly to achieve a score of 70% or higher and pass the exam within the 60-minute time limit.

What are the CPD requirements for certified individuals?

Certified individuals who are registered in the CySEC Public Register are required to complete 10 hours of Continuous Professional Development (CPD) on financial and regulatory topics each calendar year and pay an annual renewal fee of €80.

What is the difference between CySEC Basic and CySEC Advanced certifications?

The CySEC Basic exam is designed for individuals providing basic client services (such as marketing, receptionist, customer support). The Advanced exam covers the entire legal and regulatory framework (including prudential requirements, capital adequacy, fund structures, EMIR, and BRRD) and is mandatory for senior directors, compliance officers, and portfolio managers.

How are client assets protected under CySEC rules?

Cyprus Investment Firms (CIFs) must hold client funds in bank accounts segregated from the firm's own operating cash. Reconciliations must be performed daily, and CIFs cannot use client assets for their own trading or business operations. Additionally, retail client deposits are covered by the Investor Compensation Fund (ICF) up to €20,000 in case of CIF insolvency.

What is the role of MOKAS in Cyprus?

MOKAS (Unit for Combating Money Laundering) is the Cyprus Financial Intelligence Unit (FIU). Under Cyprus AML laws, all regulated entities (including CIFs, banks, and funds) must report any suspicious transactions or activities to MOKAS immediately via Suspicious Transaction Reports (STRs) or Suspicious Activity Reports (SARs).