Brussels, 18/06/2013 (Agence Europe) - On Monday 17 June, the Cypriot government decided to publish details of the conclusions reached by auditors Moneyval and Deloitte on the fight against money-laundering in Cyprus, despite the fact that they initially decided not to publish them.
A European source commented: “The Cypriots initially did not want to publish due to the market sensitivity of the subject. However, since the summary report has become public, they decided to publish and we think this is a wise decision”. A Cypriot source confirmed that this was indeed the reason for deciding to go ahead and publish.
In May, the island's central bank criticised the report by the troika (European Commission, European Central Bank and International Monetary Fund) as being unbalanced because it only mentioned shortfalls in the system, thus sending the wrong message to the media (see EUROPE 10852).
Among the positive points, Moneyval says: “The assessors note that the Cypriot authorities have taken a range of legislative and other measures, in line with Financial Action Task Force (FATF) and European Union standards, to minimise the risk of money laundering and financing of terrorism. Basically sound preventive requirements have been in place for several years at the levels of customer identification, identification of beneficial owner, record-keeping and reporting of suspicious activities. The report also positively notes the high standards of knowledge and experience of anti-money laundering and combating of terrorism issues demonstrated by banks and their commitment to implement customer due diligence measures”. The Council of Europe experts add: “The report refers to the substantial international business, mainly tax-driven, which is conducted in and through the Cypriot banking sector. This involves various features such as complex corporate structures, trusts, cross-border transactions, introduced business, the use of nominee shareholders and directors and client accounts. These features are not unique to Cyprus and many of them can be found in banking systems world-wide. Nonetheless, the assessors express their concern that in high-risk cases the combination of these features associated with international banking business may bring the cumulative level of risk beyond a level that the customer due diligence measures currently being applied can effectively mitigate” and, despite the best efforts of the banks, information about clients is not always sufficient to generate an economic and commercial profile. Moneyval therefore makes 13 recommendations, such as increase monitoring of lawyers and accountants.
Deloitte says that the Cypriot legal requirements are more detailed and, to an extent, more binding than in many other jurisdictions, but there are certain gaps in information about clients.
The Cypriot central bank is refusing to take responsibility for the money owed by the country's second-biggest bank, Laiki, to the ECB, saying that until 21 March 2013, the ECB did not raise any objection to the provision of emergency liquidity to Cyprus' two largest banks and that, until that point in time, Cypriot banks had been solvent. A Cypriot parliamentarian says that, at the Cypriot parliament last week, the president of the ruling party had said that proceedings should be launched against the ECB for irregular injections of capital. (EL/transl.fl)