Russian Laundering Accusations Are Unjust, Cypriot Speaker Says

Accusations that Cyprus is a tax haven and money laundering center for Russians are “unfounded” and “unjust”, Cyprus Parliament President Yiannakis Omirou said.

Cyprus fully complies with international conventions and European legislation against money laundering, Omirou said in a letter to his counterparts in all 17 euro-area members and to European Parliament President Martin Schulz. The International Monetary Fund, the Council of Europe and the Organization for Economic Cooperation and Development have all given a “high” ranking for the country’s adoption and implementation of the measures, he said.

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 IMF. Investment flows between Russia and Cyprus create suspicion that laundering may be behind the transactions, German Finance Minister Wolfgang Schaeuble said Jan. 21. Euro-region states will make tougher money-laundering laws in Cyprus a precondition for aid, he said a day later.

Cyprus isn’t used by Russian oligarchs to deposit illegal money and Cypriot banks are subject to “strict” controls for opening accounts and for transferring funds, with lenders supervised by the Central Bank of Cyprus and by extension the European Central Bank, Omirou said, according to a statement on Cyprus government press office’s website.

Transit Hub

Given its EU membership, Russian companies use Cyprus as a transit hub for investing across Europe and for listings on the London Stock Exchange, Omirou said. Cyprus appears as the biggest investor in Russia because Russian capital in the form of dividends comes to Cyprus and is reinvested in Russia, he said.

Omirou rejected the allegation that business activities in Cyprus are dominated by Russia, with only three of more than 80 shipping companies registered on the island belonging to Russians, compared with 36 owned by Germans, while Canadian energy firms invest in Russia via Cyprus and Israelis invest in the Russian and Ukrainian property markets via the country, Omirou said.

The holding company model of Cyprus is similar to that of Malta, Luxembourg and the U.K. while the country’s low tax regime, which compares to that of Ireland and Luxembourg, was approved by the EU when Cyprus joined the bloc in 2004, Omirou said.

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