By Poly Pantelides
OVER100 accounts in the Bank of Cyprus UK, a bank subject to UK financial regulations, were shut down by British regulators as high risk accounts for money laundering, the governor of the Cyprus Central Bank (CBC) has said.
Panicos Demetriades told lawmakers during a House Ethics committee the accounts, mostly belonging to unnamed Cypriots, had been shut down as part of anti-money laundering checks on politically exposed persons (PEPs) who were considered high risk customers.
It was not immediately clear when the accounts were shut down but main opposition AKEL MP Irene Charalambidou, who first raised the issue, said her information suggested “those accounts were opened during a key time for Cyprus”.
She added that an official with Inland Revenue said they were launching an investigation.
The UK’s 2007 anti money laundering regulations define as a “politically exposed person” as any individual who has had a “prominent public function” by a state other than the UK, a community institution or an international body “at any time within the preceding year”.
Family members such as spouses and children and their spouses, or close associates are also considered to be PEPs, and regulations provide for increased monitoring and due diligence.
The definition of close associates includes individuals who have a close business relation or has sole or joint “beneficial ownership of a legal entity or legal arrangement” related to a politically exposed person. This includes setting up legal entities to benefit politically exposed persons.
Head of the Watchdog Committee Demetris Syllouris said they were meeting with the attorney-general’s office to discuss the matter further and had asked to receive more data on the accounts.
He avoided saying whether he would make public the data, saying that “if there is any information that we must discuss publicly we will do so”. So far, Syllouris and the House Ethics Committee have avoided naming anyone in their month-long discussions of bad banking practices.
The banks’ lack of adequate supervision and subpar governance was exposed at large after a botched bailout and the near-devastation of the country’s entire banking system, but the Ethics committee has avoided names even when specific individuals were identified and discussed in the media.