Financial Crime World

Financial Regulation Enforcement Agencies in Cyprus Forge Partnership with US Counterparts to Combat Money Laundering and Sanctions Evasion

Strengthening Cooperation to Combat Financial Crimes

In a bid to combat money laundering, sanctions evasion, and other financial crimes emanating from its financial and professional services sectors, Cyprus has announced a partnership with the United States aimed at identifying and prosecuting illicit financial activities. According to a joint statement released on Tuesday, Cypriot law enforcement agencies plan to sign a memorandum of agreement with the US Justice Department and Federal Bureau of Investigation to share expertise and resources in this area.

Key Provisions of the Agreement

  • The US Department of Justice will provide expert prosecutorial assistance to its Cypriot counterparts in detecting, investigating, and prosecuting cases involving financial crimes with a nexus to Cyprus.
  • The effort will involve 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).
  • The agreement is set to take effect in 2024.

Background: Cypriot Role in Money Laundering

The announcement comes on the heels of a recent investigation by the International Consortium of Investigative Journalists, which revealed that Cyprus plays a significant role in moving dirty money for Russian President Vladimir Putin’s regime and other brutal dictators. The report found nearly 800 companies and trusts registered in secrecy jurisdictions that were owned or controlled by Russians who have been sanctioned since Russia’s invasion of Crimea in 2014.

Cypriot Government Response

In response to the allegations, Cypriot President Nikos Christodoulides vowed to investigate all wrongdoing within a specified timeframe. Since then:

  • A team of FBI agents and officials from the US Treasury Department’s Financial Crimes Enforcement Network has deployed to Cyprus to assist local authorities.
  • The government has approved the creation of an oversight body to review cases that may run afoul of international sanctions.

Concerns and Criticisms

However, the plan has drawn some criticism, with the Cyprus Bar Association expressing concerns that it may pose risks to attorney-client privilege among other problems. The association had not been properly consulted prior to the government’s approval of the oversight body. The FBI and Department of Justice declined requests for comment on the matter.

Conclusion

The partnership between Cypriot and US financial regulation enforcement agencies aims to strengthen cooperation in combating money laundering, sanctions evasion, and other financial crimes. While the agreement has drawn some criticism, it is expected to enhance the effectiveness of anti-money laundering efforts and improve international cooperation in this area.