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25th Jun 2018

Rehn: Cyprus must act on money laundering

  • Rehn's remarks give the lie to Cypriot claims that money laundering is a non-issue (Photo: ec.europa.eu)

EU financial affairs commissioner Olli Rehn has joined calls for Cyprus to stop bank fraud if it wants EU help.

Speaking in German daily Handelsblatt on Friday (11 January), he said Cyprus has adopted international rules on anti-money-laundering "[but] these laws actually have to be applied. I am aware of the problems."

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He noted that Peer Steinbruck - the German centre-left SPD party's candidate in autumn elections - told him "personally" on Tuesday he will oppose the bailout unless Cyprus cleans up its act.

"I believe we can address the concerns of the SPD ... [it] will agree to the Cyprus bailout in the end, if we find a compelling solution which is acceptable to the [German] taxpayer and which helps us to finally overcome the problem of money laundering," Rehn said.

The commissioner's remarks give the lie to Cypriot claims that money laundering and tax evasion are not part of EU negotiations on its potential €17 billion rescue.

The small island nation has a large offshore banking sector which is popular with Russian and Ukrainian businessmen.

It is also fighting proposals that its foreign creditors should suffer a "haircut" on their money on the model of the Greek bailout.

Under German law, the Bundestag has to approve any EU rescue deal.

But if the SPD and other bailout sceptics - the left-wing Die Linke party, the Greens and rebel MPs in Chancellor Angela Merkel's coalition - oppose the deal, the government will not get it through.

SPD chief Sigmar Gabriel on Wednesday also told press that Cyprus has not done enough to merit help.

Merkel herself on Thursday noted: "There can be no special conditions for Cyprus because we have common rules in Europe that are valid for everyone."

Merkel warns Cyprus not to expect special treatment

German Chancellor Angela Merkel has warned Cyprus it should not expect special treatment when negotiating the terms of its bailout, which she suggested would not be concluded anytime soon.

Investigation

Cyprus launches probe into Russian mafia money

Cyprus has opened an investigation into evidence that stolen Russian tax money linked to the murder of Sergei Magnitsky was laundered through its banks.

EU proposes €5mn fines for money laundering

Individual staff should be fined up to €5 million and firms, such as banks, should be fined 10 percent of turnover for flouting anti-money-laundering laws, the EU says.

Opinion

The risks behind the 'green bond' boom

The EU should not overuse the financial system in order to achieve environmental goals, or it risks the emergence of a green bond bubble which would be detrimental to the financial sector and hinder the achievement of climate targets.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

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