Cyprus’ anti-money laundering measures go beyond international standards to combat financial crime, says head of the Cyprus Financial Intelligence Unit Eva Rossidou-Papakyriacou.
Could you give us a brief overview of the Cyprus Financial Intelligence Unit, the Unit for Combating Money Laundering (MOKAS)?
MOKAS was established in 1997 after the enactment of Cyprus’ anti-money laundering legislation. Our key responsibilities are receiving, requesting, analysing and investigating disclosures of suspicious transactions reports (STRs) and other relevant information concerning money laundering and terrorism financing activities.
There has recently been a lot of negative press and allegations of financial crime in Cyprus and the close relationship between Cyprus and Russia has been heavily scrutinised. Why do you think these reports have emerged and how would you respond to them?
Naturally financial crime and money laundering occurs all over the world, which is why Financial Intelligence Units have been established to contribute in the Law Enforcement efforts. However, these recent allegations about Cyprus are disappointing, as those making the accusations have failed to provide any concrete evidence to justify the claims. We have proactively requested details in order to investigate and take necessary action, however to date we have not been given any evidence or facts on what these claims are based on, which I find very suspicious.
We have a lot of international business both from the EU and Russia, and there have been claims that there are Russian oligarchs in Cyprus. There are Russians in many countries and being an oligarch – or a Russian for that matter – is not equal to being a criminal. As with every request, whether we receive one on Russians or other nationalities operating in Cyprus, we investigate all suspicions in cooperation with the respective Financial Intelligence Units (FIUs) and Law Enforcement Authorities of other countries.
We are open to any justified requests for investigation, we have the necessary laws in place and have solid cooperation with our counterparts in other countries. These allegations have arisen mostly from political issues in Europe. I am not a politician, but Cyprus has been under attack as a financial centre and public opinion has been negatively influenced by these unjustified claims.
What legislative and practical measures has Cyprus taken to combat possible abuse of its financial facilities for criminal activities, including money laundering?
Cyprus has fully adopted and implemented all international measures and in some areas we even go beyond international standards to combat financial crime. Currently, Cyprus is the only EU member state that applies a stricter threshold to identify beneficial owners of legal entities, making our system more transparent than in many other countries. Many foreigners register international companies and bank accounts in Cyprus and an important element in international anti-money laundering measures is the identification of beneficial owners. There is a strict application in our law to identify persons who control 10% of a legal entity, whereas the EU directive and the Financial Action Task Force (FATF) recommendations oblige countries to only identify those controlling 25% of a legal entity.
Another measure which goes beyond international standards is that we have the legal power to request banks to postpone both domestic and foreign financial transactions without a court order so that we can analyse suspicions. This can be crucial for investigations and is a measure very few countries have in place today.
What investigative powers and jurisdiction does MOKAS have and does it have cross-border cooperation with similar institutions or units in other countries?
We have full investigative powers and function within the Attorney General’s office. We have a robust system in place. Our legislation demands mandatory reporting of suspicious transactions to MOKAS. Our unit can apply to the courts to obtain freezing, confiscation and disclosure orders – and with a disclosure order bank secrecy can also be lifted if cause can be justified. MOKAS and other international law enforcement authorities have strong cooperation; we exchange information with other FIUs and execute formal requests for legal assistance from other countries. We also register and enforce foreign court orders from both the EU and third countries for freezing and asset confiscation in Cyprus.
What level of cooperation does MOKAS have with the financial, legal and banking sectors in Cyprus and are its operations fully supported by these sectors?
We are fully supported. The law places additional administrative requirements on all institutions engaged in financial activities, which are designed to achieve two objectives: to facilitate the recognition of suspicious transactions through the strict implementation of the ‘know your client’ principle and to provide an audit trail for law enforcement agencies through adequate record keeping procedures. The implementation of these preventive measures is monitored by the respective supervisory authorities, such as the Central Bank.
Have the anti-money laundering measures of Cyprus been evaluated by the EU or other international institutions? If so, by who and what were their findings and conclusions?
MOKAS and the Central Bank participate in the Council of Europe Committee MONEYVAL and other international bodies. Cyprus’ anti-money laundering measures have been evaluated by the Committee of the Council of Europe, Financial Action Task Force (FATF), and the International Monetary Fund. We were evaluated for the first time in 1998 and have had four evaluations since. The last complete MONEYVAL evaluation was in 2011 and we were rated very favourably compared to other countries, proving Cyprus’ high level of compliance to international standards. Also the US State Department issues an annual report, which has commended Cyprus for its strong anti-money laundering measures and legal framework.
What are the future aims of the Cyprus Authorities in securing a transparent business environment in Cyprus?
There is always room for improvement and there is no perfect system, but we compare well to our European partners as well as third countries in our measures to secure a transparent business environment. During the Cyprus EU Presidency, we highlighted the need for a new EU directive for the freezing and confiscation of criminal proceeds and we managed to successfully finalise the file at Council level. This is another example of our commitment to the continuous improvement of not only national, but EU legislation in combating financial crime and we continue to contribute to the development of these measures across Europe.
Before her post as head of the Cyprus Financial Intelligence Unit MOKAS, Eva Rossidou-Papakyriacou worked as a public prosecutor in the Cyprus Attorney General’s office and as a lawyer in the Cyprus Ministry of Finance. She is also a representative of Cyprus to international organisations such as Moneyval Committee, Egmont Group, EU Committees and is the Current Committee chair of the Conference of the Parties of the Council of Europe Convention of Money Laundering and Terrorist Financing.