Friday

21st Sep 2018

Cyprus bank accuses troika of misleading EU ministers

  • Cyprus banks: what really goes on behind closed doors? (Photo: Berge Gazen)

The Cypriot central bank has said eurozone finance ministers were misled by a critical report on money laundering on the island.

The report in question is a four-page summary of a longer study written by Moneyval, a unit of the Strasbourg-based Council of Europe, and Deloitte, a US accountancy firm.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The summary was drafted on behalf of the "troika" - the European Central Bank, the European Commission and the International Monetary Fund - and circulated to ministers on 14 May.

It was also leaked last weekend by the Cypriot website stockwatch.com.cy.

It says that some leading Cypriot banks rely on "high risk" clients for most of their business, that banks do not do proper checks on who their customers are and that they do not file "suspicious transaction reports" even in "compelling cases."

It notes there are "systemic deficiencies in the implementation of preventive measures by the audited institutions."

It prompted Jeroen Dijsselbloem, the chair of the eurozone ministers' meetings, to say: "This report shows that while the legal [anti-money-laundering] framework is OK, the implementation is really lacking" and to call for action from Cyprus.

But eurozone ministers never saw the full version of the study.

The full version is accessible only to the Cypriot central bank and to a handful of troika officials because it contains commercial secrets and private data of individual banks and their clients.

According to the Cypriot central bank in a statement sent to press on Friday (24 May), it tells a different story.

The bank quoted from the Deloitte section of the full report, which speaks of a "generally solid level of compliance" with customer due diligence (CDD) obligations, which are "more detailed … than in many other jurisdictions, including other EU member states."

It said Deloitte found just 29 suspicious transactions out of the 570,000 which it audited.

It said the Moneyval section of the full study speaks of "strong" implementation of CDD rules and "strong" anti-money-laundering measures, including "the rejection of some high risk business."

It said Moneyval also praises Cypriot banks because they "identify customers in all cases" and "through all layers" of complex company structures.

The Cypriot central bank in its own comments added: "The summary paper does not provide a synopsis of the main findings of the [Deloitte and Moneyval] reports but rather a description of the perceived weaknesses of the system, drawing inferences where none exist in the original reports."

It complained that the authors of the summary did not consult the authors of the full report.

It said the summary "cannot be considered balanced" because it does not mention the positive findings.

It also said that in the "reports as a whole, there is no reference to or indication of systemic deficiencies … [and] the general picture portrayed is not negative."

For its part, the troika is currently drafting an action plan for anti-money-laundering reforms in Cyprus.

Dijsselbloem on 14 May said troika officials will closely monitor compliance, hinting that EU bailout funds might stop flowing if Nicosia does not fall into line.

But it is unclear which version of the Cyprus money laundering study - the short/negative or the long/positive version - the troika will use as the basis for its demands.

Sefcovic launches bid to be EU Commission president

Europe must have a robust foreign policy and nurture high-tech industries, Slovak EU commissioner Maros Sefcovic has said in his bid to succeed Jean-Claude Juncker as the next EU commission president.

'Every group split' ahead of EU copyright vote

Political groups in the European Parliament are split about how to vote for a directive that would reform the EU's copyright regime - amid warnings that freedom of expression and creators' rights are at risk.

Stakeholders' Highlights

  1. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  2. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  3. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  4. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  5. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  6. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  7. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  8. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  9. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  10. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  11. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  12. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow

Latest News

  1. Wake-up call on European Day Against Islamophobia
  2. Sound of discord at 'Sound of Music' Salzburg summit
  3. Salzburg summit presses for bigger Frontex mandate
  4. UK's post-Brexit plan 'will not work', EU says
  5. Airbnb agrees to clarify pricing for EU
  6. Libya keeps coast guards rejected by the EU
  7. EU divisions on menu at Salzburg dinner
  8. EU mulls action to prevent cattle suffering at Turkish border

Join EUobserver

Support quality EU news

Join us