Cyprus Eyes U.S. Help in Fight Against Financial Crime as Island Nation’s Role in Money Laundering Unveiled

Partnership Aims to Counter Money Laundering, Sanctions Evasion, and Other Financial Crimes

Cyprus is set to sign a memorandum of agreement with the United States Justice Department and Federal Bureau of Investigation (FBI) in 2024, aimed at countering money laundering, sanctions evasion, and other financial crimes. The partnership will see Cypriot law enforcement agencies work closely with their US counterparts to identify and prosecute illicit financial activities emanating from the island nation’s financial and professional services sectors.

Sharing Expertise and Resources

According to a joint statement released Tuesday, the Department of Justice (DOJ) will share its expertise with Cypriot authorities to proactively detect, investigate, and prosecute cases involving financial crimes linked to Cyprus. The US State Department’s Bureau of International Narcotics and Law Enforcement Affairs, along with the Cyprus Law Office of the Republic and the country’s Finance Intelligence Unit MOKAS, are also set to be involved in the initiative.

Background: Investigative Journalism Project Unveils Cyprus’ Role in Money Laundering

The move comes in the wake of a major investigative journalism project, Cyprus Confidential, which revealed that Cyprus plays a significant role in moving dirty money for Russian President Vladimir Putin’s regime and other authoritarian actors. The investigation, led by the International Consortium of Investigative Journalists and 67 media partners, uncovered over 3.6 million leaked documents showing nearly 800 companies and trusts registered in secrecy jurisdictions linked to sanctioned Russians.

Key Findings: Cyprus-Based Companies Linked to Sanctioned Russians

Among these were more than 650 Cyprus-based companies and trusts, including: * Mother companies of Russian holdings * Subsidiaries of conglomerates * Opaque entities used to conceal investments in properties, yachts, and world-famous artwork

Government Response: Investigation and Oversight Body Creation

Following the investigation’s launch in November, Cypriot President Nikos Christodoulides vowed to investigate all allegations of wrongdoing within a specified timeframe. In response, a team of FBI agents and officials from the US Treasury Department’s Financial Crimes Enforcement Network was deployed to Cyprus to assist local authorities. The Cyprus government subsequently approved the creation of a professional-services sector oversight body to review cases that may violate international sanctions.

Challenges and Criticisms

However, the plan has drawn criticism from some quarters, including the Cyprus Bar Association, which claims it was not adequately consulted prior to the government’s approval of the oversight body. The association has expressed concerns over potential risks to attorney-client privilege among other issues.

Expectations: Strengthening Cyprus’ Efforts in Combating Financial Crime

Despite these criticisms, the new partnership is expected to strengthen Cyprus’ efforts in combating financial crime and its reputation as a major player in the global financial system.