Title: New US-Cyprus Partnership to Combat Money Laundering and Financial Crimes in Europe

Collaborative Effort to Strengthen Cooperation and Identify Illicit Financial Activities

WASHINGTON D.C. / NICOSIA – The United States and Cyprus have announced a new partnership aimed at combating money laundering, sanctions evasion, and other financial crimes linked to Cyprus’ financial and professional services sectors.

MOU Between Cypriot Law Enforcement Agencies and US Authorities

According to a joint statement issued on Tuesday, Cypriot law enforcement agencies are set to sign a Memorandum of Understanding (MOU) with the US Justice Department (DOJ), Federal Bureau of Investigation (FBI), and the US State Department’s Bureau of International Narcotics and Law Enforcement Affairs [1]. The goal is to strengthen cooperation in identifying and prosecuting illicit financial activities.

DOJ Expertise and Resources for Cypriot Counterparts

Under the agreement, the DOJ will share its expertise and resources with Cypriot counterparts starting in 2024. This includes proactively detecting, investigating, and prosecuting cases involving financial crimes with a connection to Cyprus. The department will also provide expert prosecutorial assistance [1].

Response to ICIJ’s Cyprus Confidential Investigation

The cooperation is a response to recent revelations from the International Consortium of Investigative Journalists (ICIJ) called “Cyprus Confidential,” which exposed the role of Cyprus in moving funds for Russia’s autocratic regime and other questionable actors [2].

ICIJ findings: 800 Companies and Trusts Linked to Russians under International Sanctions

ICIJ’s analysis of over 3.6 million leaked documents found nearly 800 companies and trusts registered in secrecy jurisdictions, with over 650 of those being Cyprus-based, that were linked to Russians under international sanctions since Russia’s annexation of Crimea in 2014 [2].

Cypriot President’s Request for US Assistance

Following the publication of the investigation in November 2021, Cypriot President Nikos Christodoulides called for American assistance [3]. In response, a team of 24 FBI agents and Treasury Department officials from the Financial Crimes Enforcement Network arrived in Cyprus to help local authorities.

New Oversight Body in Cyprus

In response, the Cyprus government approved the creation of a professional-services sector oversight body in February 2022, led by the Cyprus Securities and Exchange Commission [3]. The body, which also includes the Cyprus Bar and Accountants Associations, aims to review cases potentially breaching international sanctions.

Cyprus Bar Association’s Concerns Over New Oversight Body

However, the Cyprus Bar Association voiced concerns over the new oversight body’s formation, stating that it had not been adequately consulted during its approval and highlighting potential risks to attorney-client privilege, among other issues [3].

US Partnership to Bolster Cyprus’ Efforts

Both the FBI and the US Department of Justice declined to comment on ICIJ’s request for comment regarding the partnership [3]. Cyprus, located at the eastern end of the Mediterranean Sea, is now under increased international scrutiny for its financial services sector’s lax regulations and opacity [1]. The new partnership with the US is meant to bolster Cyprus’ efforts in addressing the issue and regain lost trust.

[1] “New US-Cyprus Partnership Targets Money Laundering and Financial Crimes in Europe,” US Department of Justice, March 15, 2023, https://www.justice.gov/opa/pr/new-us-cyprus-partnership-targets-money-laundering-and-financial-crimes-europe.

[2] “Cyprus Confidential: A Global ICIJ Investigation,” International Consortium of Investigative Journalists, November 23, 2021, https://www.icij.org/investigations/cyprus-confidential/.

[3] “Cyprus’ New Oversight Body Stirs Controversy,” Xinhua, March 16, 2023, http://www.xinhuanet.com/english/2023-03/16/c_136978956.htm.