WHEN Cyprus had sought financial assistance from the EU in 2012, during the bailout talks there were many reports in the German media labelling the island a money laundering centre that did not deserve to be helped. Many German MPs complained that EU taxpayers would be propping up a state that was being used by Russian oligarchs for money laundering. Their claims were based on a leaked report by the BND intelligence service that showed Russian oligarchs and organised crime groups held deposits amounting to €25 billion in Cypriot banks.
The Cyprus government was outraged by these stories flatly denying them and insisting that the banks followed all the anti-laundering procedures. Indignant parties were convinced the Germans were plotting to destroy our economy because they did not approve of the low corporate tax that attracted many foreign companies. At German insistence, a consulting firm was brought in to investigate the Cypriot banks and established that they had been following all the correct procedures and found no evidence of laundering.
This reputation has stuck however, because whenever our authorities are asked to show their commitment to fighting laundering they are found wanting. The EU Observer web-site reported earlier this week that back in 2012 Cyprus’ anti-corruption agency Mokas had been given 133 pages of documents, showing how the Russian Kluyev group, an organised crime syndicate had moved $31 million of stolen money out of Russia using Cypriot banks. The money was from a huge tax scam that was uncovered by Russian accountant Sergei Magnitsky in 2007; after going public, Magnitsky was jailed and killed in prison in 2009.
To this day, Mokas has done nothing about the case, presumably not considering it worthy of investigation. It has been said that there was no case of money laundering because the Russian government did not consider the $31 million stolen but this was a cop-out. A country that has been at the centre of money laundering allegations for years needs to act on all information passed on to it if it is ever to restore its reputation. This is a high profile case, which the Council of Europe had investigated and should not have been swept under the carpet by Mokas.
But while Mokas completely ignored the money laundering allegations, the ministry of justice gave permission to Russian interior ministry officials to carry out a raid last Friday of a Nicosia law firm that represented the Hermitage Fund for which Magnitsky worked. It is incredible that Cyprus immediately granted a legal assistance request to Russia which is pursuing posthumous criminal proceedings against Magnitsky – the UK turned down the same request – but for three years has done nothing about the money laundering allegations.
And then we wonder why Cyprus is still linked to money laundering.
( Cyprus Mail, 4 December 2015)