The Central Bank of Cyprus (CBC) is examining potential violations mentioned in the ‘Cyprus Confidential’ papers insofar as they concern credit institutions, it said on Thursday.
It said that as a result of the targeted supervisory actions of the CBC, from the end of 2018 until today, credit institutions terminated business relations with a total of 42,728 shell companies and closed 125,782 bank accounts.
The global investigation ‘Cyprus Confidential’, published on Tuesday claimed to show how Russian influence in Cyprus and local service providers helped oligarchs and billionaires structure their wealth over the years preceding the 2022 full-scale invasion of Ukraine.
The report was compiled by the International Consortium of Investigative Journalists (ICIJ) and the Organised Crime and Corruption Reporting Project (OCCRP), according to whom more than 270 journalists from 68 news organisations worked on the investigation over eight months, cooperating from 55 countries and regions.
The investigation dealt extensively with corruption, sanctions-busting and how Russian wealth was allegedly shielded, relations with Russia, the role of the banking sector and of independent institutions and the well-documented golden passports scandal.
“As Russian money poured into Cyprus’ banks, a rising industry of Cypriot lawyers, bankers, accounting firms, tax planners, and investment managers rose to process it — helped by lax bank regulation that asked few questions about where the money came from and notorious secrecy laws that blocked foreign authorities (or anyone) from learning the real owners of Cyprus-registered corporations and account holders,” the investigation claims.
“Not only were Cyprus banks considered reckless and poorly supervised, they were stuffed with Russian money — $31 billion, a figure larger than Cyprus’ GDP. Much of that was held by non-residents, and much of it believed to be dirty.”
In its response on Thursday, the CBC said that in order to assess the level of compliance of credit institutions with the legal and regulatory framework for the prevention of money laundering, the CBC conducts in-depth on-site audits, emergency audits and implements continuous remote monitoring.
“In this context, and in addition to the checks mentioned above, the CBC is now also examining the potential violations mentioned in the publications, insofar as they concern credit institutions,” it said.
The CBC said that since 2015, as a result of its supervisory controls for the purposes of preventing the use of the financial system for money laundering or terrorist financing, it had imposed fines in 13 cases.
The institution was also responsible for the compliance of supervised institutions with the targeted financial sanctions decided and imposed by the United Nations Security Council and the European Union, it said.
As part of its ongoing efforts to further strengthen the level of compliance of supervised institutions with the sanctions regime, the CBC partnered in 2023 with a reputable solutions provider to carry out audits to assess the systems implemented by supervised institutions to implement sanctions and the monitoring of transactions. The process of evaluating the sanction control systems of the supervised institutions is in the final stage, it added.
“Cyprus is assessed by Moneyval… As part of Moneyval’s fifth evaluation round, the relevant evaluation report for Cyprus was published in 2020,” the CBC said.
This detailed the measures taken by Cyprus to combat money laundering illegal activities and terrorist financing in recent years and noted some areas where further improvements were needed. In particular, with regard to financial institutions, the evaluators expressed both verbally and in writing the special importance of the work carried out at CBC, the statement concluded.