US and Cyprus Join Forces to Combat Money Laundering and Sanctions Evasion

In a bold move to strengthen their collaboration against financial crimes, the United States and Cyprus have announced plans to formalize an agreement that will enhance their law enforcement capabilities in investigating money laundering, sanctions evasion, and other illicit financial activities.

Significance of the Agreement

Niall Hearty, a partner at Rahman Ravelli, spoke about the importance of this partnership during a recent press conference. With US law enforcement authorities set to extend their expertise to their Cypriot counterparts, the island nation’s ability to detect, investigate, and prosecute financial crimes will significantly improve.

Investigations Surrounding Allegations of Sanctions Evasion

Last year, allegations arose that Cypriot financial institutions had been facilitating the bypassing of international sanctions by Russian oligarchs. President of Cyprus, Nikos Christodoulides, welcomed FBI and US Department of Justice (DOJ) officials to aid investigations. These claims came after an exposé by the International Consortium of Investigative Journalists, which identified Cyprus as a significant route for money laundering on behalf of Russian President Vladimir Putin’s regime and other authoritarian governments.

Suspected Cyprus-based Companies, Lawyers, and Accountants

Although Cyprus has emphasized compliance with imposed sanctions against Russia, US authorities have uncovered several Cyprus-based companies, lawyers, and accountants they believe have helped Russians evade sanctions.

Extending Beyond FBI and DOJ

The US-Cyprus agreement extends beyond the FBI and DOJ. The US State Department’s Bureau of International Narcotics and Law Enforcement Affairs, the Cyprus Law Office of the Republic, and the Cypriot Finance Intelligence Unit (MOKAS) will all be involved in this collaboration.

Cyprus’ Role in Money Laundering and its Offshore Holding Companies

With over 650 companies and trusts in Cyprus serving as offshore holding companies, subsidiaries of Russian conglomerates, and opaque entities concealing investments for Russian oligarchs and regimes, the US commitment to counteracting financial crimes comes as no surprise. Cyprus, located relatively close to the Middle East, has gained a notorious reputation for its role in money laundering, particularly from Russia.

Previous US Collaborations Against Money Laundering and Financial Crimes

The US has previously formed formal relationships with several countries to combat money laundering and financial crimes. Countries included in these collaborations are the UK, Australia, Brazil, and numerous European nations.