Such a move would contravene Cyprus laws, he said.

“No decision by any European organ can subvert the provisions of the constitution of an EU member-state,” Shiarly said.

“Cyprus cannot breach its own constitution and furthermore shall not allow such an action [the breach] to happen,” he added.

Following Monday’s meeting of euro-area finance ministers, Eurogroup president Jeroen Dijsselbloem spoke of an “agreement” to appoint a private-sector firm to assess the Cypriot banking system’s compliance with anti-money-laundering regulations.

The Dutch politician went on to say that Cypriot authorities and the troika would work together in determining the auditor’s terms of reference within a week.

Dijsselbloem’s remarks relayed the impression the Eurogroup had reached a decision on the matter.

Other than Dijsselbloem’s comments, the Eurogroup itself issued no statement on the matter.

And sources tell the Mail that no consensus was reached at Monday’s meeting in Brussels.

Rather, during talks Dijsselbloem had raised the issue of a private auditor, and “some countries backed the idea, while others kept silent,” the sources said.

“There was no decision per se.”

The government’s main objection to hiring a private firm was that this would raise questions about banking confidentiality and could scare away foreign bank customers.

It proposes instead that mandated institutions, such as the Council of Europe’s Moneyval, should carry out the checks.

Still, it’s not entirely clear whether the government has agreed to at least enter into a discussion of the terms of reference for a possible private audit.

Whatever the case, the statements by Shiarly and also earlier remarks by the government spokesman suggest that it is not the present administration that will tackle the problem.

Cyprus holds general elections this Sunday, with opinion polls indicating that AKEL will be out of power. The next meeting of the Eurogroup that will discuss Cyprus’ request for a bailout takes place in March.

Meanwhile the government spokesman yesterday cited a report by the Basel Institute on Governance, a not-for profit organisation, showing that Cyprus fares better than many EU countries – including Germany and the Netherlands – in its anti-money-laundering regulations.

The Basel institute awards countries an overall score, which ranges from 0 (low risk) to 10 (high risk), indicating a country's risk level in money laundering/terrorist financing based on its adherence to anti-money laundering and counter-terrorist financing standards and other risk categories such as financial regulations, public transparency, corruption and rule of law.

On the Basel index, Germany ranked 68th with a score of 5.8, the Netherlands came in 109th with a score of 5.03, and Cyprus ranked 114th, with a score of 4.93.

Of the 144 countries surveyed, the vast majority (including Cyprus, Germany and the Netherlands) are classed as medium-risk and just two (Estonia and Norway) are characterised low-risk.

“Such research…provides us an important tool to counter all the unfounded accusations hurled at Cyprus,” government spokesman Stefanos Stefanou said.

A day earlier, Stefanou took a swipe at certain EU leaders, saying “their stance shows bad faith, it shows expediency, and malicious intentions against Cyprus.”

It was understood he was alluding to Germany and the Netherlands, among others.

Whether allegations over money-laundering are warranted or not, Cyprus would do best to dial down its aggressive rhetoric, advised former President George Vassiliou.

It’s extremely unlikely that a private auditing firm would come in and start poking at the bank accounts of foreign individuals, because there are laws protecting banking confidentiality, he said.

“At the drop of a hat, the courts would put a stop to it,” Vassiliou told the Mail.

That said, Cyprus ought not to outright dismiss talk of a private audit should it come to that.

“We might not like it, but we should cooperate as far as we can. However, it all depends on the auditor’s terms of reference. If, say, they request data on random accounts to check the inflows and outflows of capital, why shouldn’t that be acceptable? But if on other hand they ask forspecific names, that’s a different story. But I just don’t see that happening.”

Above all, Vassiliou said, Nicosia needed to stop attacking EU countries.

“This is no time for grandstanding and posturing but, with elections looming, what do you expect?” he said.

Michalis Papapetrou, former leader of the United Democrats, agreed:

“Instead of seeking confrontation with the European Union, let’s focus on securing favourable terms of reference [for a private audit],” he offered.

“What happens tomorrow if EU countries set the audit as a precondition for a bailout? Without foreign assistance, the Cyprus economy is dead, and living standards will revert to the Dark Ages. Is that what we want?”

Source: Cyprus Mail