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US says Cyprus remains a major hub for shell company activity

Despite its growing engagement in counter-terrorism efforts, Cyprus remains a major hub for shell company activity, according to the US State Department.

The US State Department’s Country Reports on Terrorism 2016, states that “Predominantly due to low capacity for supervision of financial institutions and company formation, Cyprus remains a major hub for shell company activity.”

However the report does note that Cyprus has increased its cooperation with foreign countries and international organizations in combating terrorism and the financing of terrorism.

Cyprus’ counterterrorism partnership with the United States included participation in a Department of State-funded Department of Justice regional program focused on countering Hezbollah.

“The program strengthened the government’s understanding of Hezbollah and stressed the importance of interagency cooperation in countering all types of terrorism,” the report says.

Cyprus is a partner in the Global Coalition to Defeat ISIS and regularly participates in the Coalition’s Working Groups on Foreign Terrorist Fighters and Counter-ISIS Finance Group.

According to the report, Cyprus is currently reviewing its existing legislation to address the requirements set out in UN Security Council resolution (UNSCR) 2178. It is also preparing to implement the 2016 EU Directive on the use of Passenger Name Records.

Cyprus has implemented the UN Security Council ISIL (Da’esh) and al-Qa’ida sanctions regime and informally tracked individuals and entities listed under US executive orders (E.O.), including E.O. 13224.

In 2016 the Republic did not identify or freeze any assets pursuant to relevant UNSCRs.

On efforts to counter violent extremism, the report states that Cyprus “has established a network of first-line officers in the CNP (Cypriot National Police), Social Welfare Services, and Ministries of Justice, Education, and Interior, to exchange information and best practices on identifying radicalized behavior. The government has also established relationships with civil society organizations and municipal authorities to prevent radicalization to violence.”

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