Cypriot-American Partnership Against Money Laundering and Financial Crimes: A New Era of Cooperation

The Republic of Cyprus and the United States have announced plans to strengthen their partnership in the fight against money laundering, sanctions evasion, and other financial crimes originating from Cyprus’ financial and professional services sectors.

Collaboration against Illicit Financial Activities

According to a joint statement, Cypriot law enforcement agencies will sign a Memorandum of Agreement (MOA) with the U.S. Justice Department and Federal Bureau of Investigation to:

1. Identify and prosecute illicit financial activities.
2. Enhance the capabilities of Cypriot counterparts for proactively detecting and investigating such cases.

Under the agreement, the U.S. Department of Justice (DOJ) will share its expertise with Cypriot counterparts.

Participating Agencies

The collaboration extends beyond the Justice Department. The following agencies will also be involved:

• U.S. State Department’s Bureau of International Narcotics and Law Enforcement Affairs
• Cyprus Law Office of the Republic
• Cyprus Finance Intelligence Unit (MOKAS)

Background: Cyprus’ Role in Money Laundering

The new partnership comes after the publication of “Cyprus Confidential,” a cross-border investigative journalism project which:

1. Revealed Cyprus’ role as a key player in moving dirty money for Russian President Vladimir Putin’s regime and other authoritarian actors.
2. Uncovered nearly 800 Russian-owned or controlled companies and trusts registered in secrecy jurisdictions, with over 650 of those being in Cyprus.

Investigation and Response

Following the investigation, Cyprus President Nikos Christodoulides pledged to investigate all allegations and requested American assistance. In December 2021, a team of over two dozen FBI agents and officials from the U.S. Treasury Department’s Financial Crimes Enforcement Network arrived in Cyprus to provide assistance to local authorities.

Oversight Body and Controversy

In response to these revelations, the Cyprus government approved the creation of a professional-services sector oversight body in February 2022. Led by the Cyprus Securities and Exchange Commission, the authority aims to:

1. Collaborate with the Cyprus Bar and Accountants Associations.
2. Conduct reviews of cases that may breach international sanctions.

However, the plan has faced criticism from the Cyprus Bar Association, which argued that it had not been consulted prior to the government’s approval of the oversight body. Upon being approached for comment, both the FBI and the Department of Justice declined to provide a statement.