US and Cyprus Sign MoU to Combat Money Laundering and Financial Crimes: A New Era of Cooperation

Cyprus and the United States have taken a significant step towards strengthening their partnership in countering financial crimes originating from Cyprus. On Tuesday, the two countries signed a Memorandum of Understanding (MoU) to enhance cooperation and information sharing in investigating and prosecuting cases of money laundering, sanctions evasion, and other illicit financial activities.

Enhancing Cooperation Against Financial Crimes

Under the MoU, the US Justice Department (DOJ) and the Federal Bureau of Investigation (FBI) will collaborate with their Cypriot counterparts, including the Cyprus Law Office of the Republic and the country’s Finance Intelligence Unit (MOKAS), to combat financial crimes with connections to Cyprus. This cooperation includes US experts sharing their knowledge and expertise with Cypriot authorities in the detection, investigation, and prosecution of such cases.

Global Concerns and Cyprus’ Role

The impetus for this cooperation comes in response to global concerns raised by a cross-border journalism project, Cyprus Confidential, led by the International Consortium of Investigative Journalists (ICIJ) and its partners. The investigation uncovered how Cyprus, positioned at the eastern end of the Mediterranean between Turkey, Syria, and Lebanon, has played a more substantial role than expected in moving illicit funds for various authoritarian regimes and anti-democratic actors, including those of Russian President Vladimir Putin.

The Role of Cyprus in Money Laundering

The ICIJ’s analysis of over 3.6 million leaked documents identified nearly 800 Russian-linked companies and trusts registered in secrecy jurisdictions, with over 650 of them established in Cyprus. These entities serve as mother companies, subsidiaries, and opaque structures facilitating investments in properties, yachts, and world-famous artworks.

Cypriot Response and Oversight Body

Cypriot President Nikos Christodoulides acknowledged the severity of the issue and solicited US assistance to investigate the allegations. In response, a team of FBI agents and officials from the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) was dispatched to Cyprus to assist local authorities.

In January 2023, the Cyprus government approved the formation of a new oversight body, led by the Cyprus Securities and Exchange Commission, to review cases in the professional services sector that may violate international sanctions. This body, intended to work with the Cyprus Bar and Accountants Associations, aims to prevent potential breaches of attorney-client privilege and other potential issues.

Criticism from the Cyprus Bar Association

The Cyprus Bar Association has raised concerns about this new oversight body, expressing reservations about the lack of consultation and potential risks to attorney-client privilege. The FBI and Department of Justice declined to comment on ICIJ’s request for their perspective on this matter.

US’ Advocacy for Financial Transparency

The US has been a consistent advocate for financial transparency and international cooperation in combating money laundering and other financial crimes. This MoU represents a crucial step forward in the ongoing efforts to address these challenges and strengthen the global financial system.