EU Commission Rebukes Cyprus for Failure to Combat Money Laundering

The European Commission (EC) has issued a stern warning to Cyprus regarding its alleged failure to implement EU regulations against money laundering.

EC’s Stern Warning to Cyprus

The EC sent a reasoned opinion to the Cypriot government, accusing it of not correctly transposing the relevant EU directive into domestic law. ¹

Negligence in Implementing EU Directive on Anti-Fraud Measures

The EC’s announcement follows an assessment report released in November 2023, which identified weaknesses in Cyprus’s AML framework. Several EU member states, including Cyprus and Greece, were identified for neglecting to correctly implement the Directive on the fight against fraud to the EU’s financial interests. ²

Shortcomings in Cyprus’s Anti-Money Laundering (AML) Framework

The EC’s assessment report highlighted the following issues:

• Cyprus has taken certain steps to address issues related to financial crimes.
• More needs to be done to strengthen the AML framework.

Deadline to Address Concerns

The EC has given Cyprus six months to remedy the issues pointed out in the reasoned opinion. ³ If the government fails to address the concerns, the EC may take further legal action, including referring the case to the European Court of Justice. ⁴

Pressure on Cyprus

This development comes at a time when Europe is under increased scrutiny over its ability to curb financial crimes. Cyprus, which has already faced criticism for its role as a financial hub and perceived lax approach to tackling financial crimes, is expected to respond to the EC’s concerns and provide a plan of action to address the issues raised. Failure to do so could result in further EU action and damage to the country’s reputation as a financial center. ⁵

European Commissioner’s Statement

European Commissioner for Justice, Didier Reynders, stated, “[Tackling money laundering and combating financial crimes is a key priority for the European Union and its member states. It’s crucial that all member states prioritize and effectively enforce EU legislation against money laundering and fraud.”]