This content is from: Local Insights

Cyprus

No sign of money-laundering activity was found in Cyprus's banking system during the recent investigation by a team of international banking specialists from the Financial Action Task Force (FATF).

The volume of offshore and domestic banking units in Cyprus, combined with the increasing use of the island as a base for cross-border investments in neighbouring emerging markets, had raised fears that Cyprus was becoming a centre for the laundering of illicit funds through legitimate financial channels. This suspicion was reinforced by a US State Department report released in March 1997 which downgraded the island's money-laundering status from 'medium-high risk' to 'high risk'.

The FATF team worked with the special nine-member Cyprus anti-money laundering unit, the Central Bank, the Minister of Finance and officials from various commercial banks in Cyprus, and on completion of its investigation was satisfied that all necessary measures were being taken by the Central Bank and responsible government authorities to neutralize money-laundering schemes.

It is expected that the top marks given by the FATF in its report will restore Cyprus's credibility as a jurisdiction safeguarded against money-laundering and bolster the solid reputation it has established in the offshore and domestic banking sector.

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