Cyprus Cracks Down on Financial Crimes as US Partnership Takes Shape

A major crackdown on financial crimes in Cyprus is underway, with the United States and the island nation joining forces to combat money laundering, sanctions evasion, and other illicit activities emanating from its financial and professional services sectors.

The Partnership

According to a joint statement released yesterday, Cypriot law enforcement agencies will sign a memorandum of agreement with the US Justice Department and Federal Bureau of Investigation (FBI) to identify and prosecute financial crimes linked to Cyprus. Under this partnership, the US Department of Justice will share its expertise with Cypriot counterparts in 2024 to proactively detect, investigate, and prosecute cases involving financial crimes with a nexus to Cyprus.

The Effort

The effort also involves the US State Department’s Bureau of International Narcotics and Law Enforcement Affairs, as well as the Cyprus Law Office of the Republic and the country’s Finance Intelligence Unit (MOKAS).

Background

This move comes in response to revelations by the International Consortium of Investigative Journalists’ Cyprus Confidential project, which exposed how Cyprus plays a significant role in moving dirty money for Russian President Vladimir Putin’s autocratic regime and other brutal dictators. The investigation analyzed over 3.6 million leaked documents and found nearly 800 companies and trusts registered in secrecy jurisdictions owned or controlled by Russians who have been sanctioned since Russia’s invasion of Crimea in 2014.

Cypriot Response

Cypriot President Nikos Christodoulides requested American assistance following the launch of the investigation, vowing to investigate all allegations of wrongdoing within a specified timeframe. Since then, a team of FBI agents and officials from the US Treasury Department’s Financial Crimes Enforcement Network have deployed to Cyprus to assist local authorities, while the Cyprus government has approved the creation of an oversight body to review cases that may run afoul of international sanctions.

Criticism

However, the plan has drawn criticism in its formation, with the Cyprus Bar Association expressing concerns that it may pose risks to attorney-client privilege and other problems. The FBI and Department of Justice declined to comment on the matter.