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15th Apr 2024

Cyprus report 'not enough' to convince German opposition

  • Social-Democrat leader Sigmar Gabriel says Serbian mafia money is part of the 'Cypriot model' (Photo: Valentina Pop)

The German Social-Democrats say one report on anti-money-laundering measures in Cyprus will not be enough to convince them to approve a bailout for the troubled island.

"As long as there is an economic model in Cyprus based on black money, Serbian mafia income and tax dumping, I cannot imagine that we will allow German taxpayers' money to be used for the preservation of this model," German Social Democrat leader Sigmar Gabriel said on Monday (11 March) in Berlin during a press conference.

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"We will need more than a single report to convince us," he added.

A team of auditors is due on Tuesday in Cyprus to evaluate how money laundering laws are actually applied by local banks.

The report is one of the pre-conditions for eurozone finance ministers to approve the bailout request that Cyprus made last summer. Without EU and possibly International Monetary Fund help, Cyprus says it will go bankrupt by May.

The German opposition's vote is crucial in securing the Bundestag's approval of the rescue because backbenchers in Chancellor Angela Merkel's coalition are expected to vote against it.

The audit will be carried out by a mix of independent and governmental experts. The so-called Moneyval group, an intergovernmental body within the Council of Europe, which includes Russia and Ukraine, has already given Cyprus four clean bills of health on money laundering in the past 15 years.

But according to a Cypriot source, Moneyval will only check the overall system, while the individual account checks will be done by the independent auditors from a private firm, whose name is not yet public.

The audit is expected to be finished by the end of the month.

Bundestag likely to approve Cyprus bailout

The German parliament is likely to approve Cyprus' bailout programme despite concerns over a widening funding gap and growth projections which may prove too optimistic.

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