Financial Crime World

Cyprus Confronts Financial Crime Legacy as US Partnership Launched to Fight Money Laundering and Sanctions Evasion

A New Era in Combating Financial Crimes

In a significant move, Cyprus is set to sign a partnership agreement with the United States aimed at countering money laundering, sanctions evasion, and other illicit financial activities emanating from the island nation’s financial and professional services sectors.

The Partnership Agreement

Under the agreement, Cypriot law enforcement agencies will work closely with the US Justice Department and Federal Bureau of Investigation (FBI) to identify and prosecute financial crimes with a nexus to Cyprus. The partnership will also involve the US State Department’s Bureau of International Narcotics and Law Enforcement Affairs, as well as the Cyprus Law Office of the Republic and the country’s Finance Intelligence Unit, MOKAS.

Expertise Sharing

In 2024, the US Department of Justice has pledged to share its expertise with Cypriot authorities to proactively detect, investigate, and prosecute cases involving financial crimes.

The Background

The move comes in the wake of a major journalistic investigation by the International Consortium of Investigative Journalists (ICIJ), which exposed the extent to which Cyprus has been used to launder dirty money for Russian President Vladimir Putin’s regime and other authoritarian actors. The investigation, known as Cyprus Confidential, revealed that nearly 800 companies and trusts registered in secrecy jurisdictions were owned or controlled by Russians who have been sanctioned since Russia’s invasion of Crimea in 2014.

Government Response

Cyprus President Nikos Christodoulides had requested American assistance after the investigation was launched, vowing to investigate all allegations of wrongdoing within a specified timeframe. Since then, a team of FBI agents and officials from the US Treasury Department’s Financial Crimes Enforcement Network have deployed to Cyprus to assist local authorities, while the government has approved the creation of a professional-services sector oversight body to review cases that may run afoul of international sanctions.

Criticisms

However, some critics have raised concerns about the plan, including the Cyprus Bar Association, which claims it was not consulted prior to the government’s approval. The Association has expressed fears that the plan could pose risks to attorney-client privilege and other issues.

Conclusion

The FBI and Department of Justice declined to comment on the partnership agreement. Despite criticisms, the partnership is a significant step forward in combating financial crimes in Cyprus and demonstrates the country’s commitment to transparency and cooperation with international authorities.

Key Points

  • Cyprus will sign a partnership agreement with the US to combat money laundering, sanctions evasion, and other illicit financial activities.
  • The partnership will involve close collaboration between Cypriot law enforcement agencies and the US Justice Department and FBI.
  • The US Department of Justice has pledged to share its expertise with Cypriot authorities in 2024 to proactively detect, investigate, and prosecute cases involving financial crimes.
  • The move comes in response to a major journalistic investigation exposing Cyprus’s role in laundering dirty money for Russian President Vladimir Putin’s regime and other authoritarian actors.