A recent assessment of money-laundering in Cyprus, published by the Department for the Study of Contemporary Criminal Threats at Pantheon-Assas University in Paris, is achieving the difficulties for the European Union to strengthen and to integrate financial practices and integrity standards of the member states’ . But the Cypriot government hits back!
Roger-Louis Cazalet, president of the French Anti-Money-Laundering Committee, writes in the Financial Times (July 27): ‘As Cyprus prepares to adopt the Euro, with accession to the Eurozone slated for January 2008, Cypriot non-compliance will provide vast new opportunities for money-launderers seeking access to continental markets. Indeed, Cyprus’s sophisticated financial services industry, combined with the availability of a multinational currency, provides an attractive forum for those who wish to launder the proceeds of criminal activities’.
In his article Mr. Cazalet points to investigations of the UN war crimes prosecutor office: ‘When Milosevic armed himself for war against Bosnia and Kosovo in the early nineties he turned to a network of thousands of shadowy Yugoslav controlled front companies located in Cyprus’. He also mentions ‘Around the same time, Russian gangsters were actively laundering millions stolen during privatisations of state assets through fraudulent shell companies based in Nicosia;’.
So what to be done? Regarding the president of the French AML Committee, it remains unclear whether Cyprus will allocate sufficient resources to the review of existing corporations and to remedying any gaps in beneficial ownership information. Unless such steps are taken, he expects, that money-launderers will continue to use the thousands of existing shell companies to subvert Cyprus’s AML standards, continue their criminal activity and gain entry to the Eurozone.
In Mr. Cazalet’s opinion, the EU’s process for integration of new members does not appear to adequately consider current enforcement practices and the potentially negative impact on the integrity of member states’ financial services sectors. He asks the EU to compel integrating member states such as Cyprus to make genuine commitments to protect their financial services industry from exploitation by organised criminals, terrorists and other money-launderers.
‘Unfortunately’, he concludes in his article in the FT, ‘at present Cyprus’s ability and willingness both to implement existing regulations in order to identify beneficial ownership and to prosecute complex, high-stakes money-laundering schemes remain open to question’.
August 20, the FT published the Cypriot answer to Mr. Cazalet. Mrs. Eva Rossidou-Papakyriacou, Senior Council of the Republic of Cyprus and Head of the Unit for Combating Money Laundering and Council writes, that Cyprus is fighting against money laundering and will continue this fight: ‘the Cyprus law enforcement authorities and the Financial Intelligence Unit (MOKAS) have unhindered access to the identification details of of ultimate beneficial owners of all companies registered or maintaining a bank account in Cyprus’. She points to several inaccuracies in Cazalet’s article
‘Cyprus’s anti money laundering system has repeatedly been evaluated by the experts of the Moneyval Committee of the Council of Europe (FATF). The last report, in February 2006, was based on a detailed methodology elaborated in cooperation with the International Monetary Fund and the World Bank’, she explains and declares that ‘the ratings assigned to Cyprus vis-ΰ-vis the international standards (FATF recommendations) compare favourably with the corresponding ratings of other EU member states’.
The Cypriot Senior Council continues ‘The Moneyval report contains a significant number of positive comments and statements regarding the efficiency and effectiveness of measures taken by Cyprus and commends the authorities for their willingness to reduce the vulnerability of financial institutions and designated non-financial business and professions to money laundering’. Mrs. Rossidou-Papakyriacou ends with emphasising that the Cypriot government will continue the fight against money laundering and terrorist financing in accordance with international standards.
