The head of Cyprus’s anti-money laundering unit said the country doesn’t need to strengthen existing rules following accusations the island is a base for Russian illegal money flows.
“Our anti-money laundering legislation has been in line with European Union rules since 1996, well before talks started on accession to the bloc and before joining in 2004,” Eva Rossidou-Papakyriacou said in a Jan. 25 phone interview from Nicosia. “In many cases our legislation is often stricter than elsewhere in the EU.”
Two-way investment flows between Russia and Cyprus create suspicion that laundering may be behind the transactions, German Finance Minister Wolfgang Schaeuble said Jan. 21, adding the following day that euro-region states will make stronger money-laundering laws in Cyprus a precondition for aid. In June, Cyprus became the fifth euro-area nation to request a rescue and is still negotiating the size and terms with the European Union and the International Monetary Fund.
“Cyprus has nothing to hide on money laundering nor on the exchange of tax information,” Finance Minister Vassos Shiarly said in Nicosia today. The country has adopted and implemented all anti-money laundering recommendations and “there may be a lack of knowledge in many European countries on Cypriot action,” he said.
Cyprus has supervisory authorities which monitor the application of international-standard measures for preventing and suppressing money laundering, including provisions for the tracing, freezing and confiscation of assets that are suspected of coming from criminal activities, Rossidou-Papakyriacou said.
International investors, including Russians, are attracted to Cyprus as a business center because of its favorable tax regime and double tax avoidance treaties, she said.
The IMF recognized the “soundness” of Cyprus’s legal framework for combating money laundering in a review started last September. The IMF didn’t identify any loopholes and only suggested some minor changes which Cyprus, in order to show good will, has already implemented in law, Rossidou-Papakyriacou said.
With regards to 49 recommendations of the intergovernmental Financial Action Task Force on money laundering, Cyprus ranks seventh out of the 17 euro-area states in terms of the number of measures it fully complies with, according to the latest evaluation report of the Moneyval anti-laundering committee of the Council Of Europe.
Cyprus ranks second for the number of recommendations it largely complies with and is only one of four countries without any non-compliant rating, the report shows. The evaluation also covers implementation of measures.
“Cyprus is not a tax haven,” Rossidou-Papakyriacou said. “A tax haven is a country which has almost zero taxation and no controls on where money comes from and neither is true of Cyprus.”