The head of Cyprus’s anti-money laundering unit said the country doesn’t need to strengthen existing rules amid 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 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.”