Research Center
Cyprus Economy

FINANCE: Cyprus says it is unfairly targeted over dirty money claims

11 October, 2018

In response to recent bad publicity over dirty money in Cyprus, Finance Minister Harris Georgiades argues that anti-money-laundering procedures are stricter than in any other European state, while a campaign to raise international awareness is underway.

The comments came after Cyprus was among the top ten worse performers in combating money laundering and terrorism financing risks (ML/TF) for 2018, according to the Basel Anti-Money Laundering (AML) Index. Cyprus now has a higher risk rating in the index even though it is relatively low when compared to the worst offenders.

Georgiades was speaking at the 4th annual lecture he gave at the University of Cyprus on the Cypriot economy.

He said Cyprus has done a lot to correct issues of the past.

If a non-Cypriot tries to open a bank account in Cyprus and he compares the procedure to opening a bank account in any other European state, I am convinced that in Cyprus the procedure will be stricter,” said Georgiades.

“The concern and fear felt by everyone, banks, state and Central Bank meant that in Cyprus we have overcompensated in order to restore our image and to reduce the risks,” added.

The Finance Minister conceded there is increased focus internationally and on a European level on this matter and in spite of improved procedures the government has introduced, there are reports, which are more often than not unfair to Cyprus.

To correct this image of Cyprus being a haven for dirty Russian money, Nicosia has wheeled out an awareness campaign at an international level outlining the “corrective steps” Cyprus has taken.

This included the Cypriot delegation meeting with the relevant US Under Secretary of State, in Indonesia, on the sidelines of the IMF’s annual meeting.

“The meeting went very well. The concerns raised by the American authorities have been addressed, whether they related to the banks or some investment organisations,” said Georgiades.

“This is the path to follow with specific steps and correct communication so that our country’s reputation and credibility on this matter is fully restored.”

On outside criticism about the citizenship by investment programme, Georgiades said that the government carefully monitors the programme and that it has already modified the scheme twice and has made scrutiny procedures tighter.

“We are vigilant at all times, monitoring and reviewing this programme like any other tool, in order to be able to correct it again if needs be,” he said.

Transparency International said that schemes run by EU countries like Cyprus offering passports and residency permits to wealthy foreigners pose risks of money laundering as some of the programmes are not properly managed.

Major US media outlets like CNN and the Wall Street Journal have recently accused Cyprus of being a haven for the ill-gotten gains of Russia’s wealthy.