Inevitably, there were two readings of the Moneyval report that was released on Wednesday. The government saw it as approval of the work it had done in fighting corruption and money laundering, while opposition parties like Akel and Diko focused on the many recommendations and worrying references to Cyprus. It was very much a case of one side seeing the cup half-full and the other seeing it half-empty.
There were both positives and negatives, but the former were more than the latter and there was also a question of whether Moneyval was particularly tough on Cyprus because of the reputation it had acquired in the past, as a result of years of bad practices and lax regulations. For instance, Moneyval noted that the expansion of the operation of the casino, expected by the end of next year, posed many risks.
“The enlargement …. Will undoubtedly increase the ML (money laundering) and TF (terrorist financing risks,” said Moneyval, adding: “The casino is currently operating at or beyond the limits of its ML/TF compliance and risk management system.” The report said that if the casino failed to introduce an effective programme, the government “should consider not permitting it to expand that activity.”
This was indicative of the tough approach adopted by Moneyval, which acknowledged that outside consultants were preparing a plan aimed at addressing the deficiencies identified, but still wondered whether the plan would be adequate to deal with “anticipated growth.” It is almost as if the people that drafted the report felt duty-bound to put a negative spin on everything they covered in the report. They could have commended the drafting of a plan by consultants to address the deficiencies, but instead expressed concerns that the plan might not work when the casino expanded.
Finance Minister Constantinos Petrides focused on the positives. Out of the 98 countries that were assessed, Cyprus was among 25 which did not exhibit a low rating on any of the 11 pillars measuring the effectiveness of measures. In the technical aspects of the report it showed Cyprus was ‘compliant’ or ‘largely compliant’ on almost all 40 parameters and ‘non-compliant’ on none.
There may still be weaknesses and deficiencies, but the banks have closed thousands of suspicious accounts while their compliance departments routinely make life difficult for businesses and drive customers away; a bank was closed down because of suspected ML and TF. All this is proof that Cyprus has got its anti-money-laundering act together. There is still much to be done, but everyone, including the government and central bank have acknowledged this. Moneyval’s report will keep the authorities on their toes and ensure complacency does not set in.