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12° Nicosia,
16 June, 2024
 
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Occupied territories are a 'black hole' for illicit funds

Challenges in combating illicit financial activities highlighted amidst new cooperation efforts

Apostolis Tomaras

Apostolis Tomaras

The recent update to the US-UK sanctions list, active since last April and aimed at Russia, continues to scrutinize Cypriot-based entities suspected of violating the Russian embargo. The US Treasury Department's Office of Foreign Assets Control (OFAC) added thirteen (13) legal entities and two (2) individuals to the updated list, including one Cypriot company. This underscores ongoing concerns about the extent of Cypriot involvement and potential political implications.  In Nicosia, authorities remain vigilant about entities possibly evading Russian sanctions, particularly those engaging in activities involving fictitious assets to bypass sanctions. The government is committed to combating money laundering comprehensively, echoing similar efforts in the United States. However, the lack of clarity regarding future actions and the absence of timely communication from American counterparts raise uncertainties.  Government sources acknowledge the uncertainty surrounding the inclusion of other Cypriot companies on the US-British list. Despite the positive atmosphere, Nicosia has not received timely updates from Washington, leaving the possibility open for additional Cyprus-based companies to be added to the sanctions list.

The new entry

Since the initiation of sanctions against Russia, the compiled list has targeted companies or individuals allegedly aiding in circumventing US Treasury Department sanctions against Russia. According to US authorities, this assistance was provided to companies facilitating transactions within the Russian financial system. In this context, the US Treasury Department added Tokentrust Holdings Ltd, a Cyprus-based company with a majority stake in Atomaiz, to the list. The Americans stated that these companies, including Tokentrust Holdings Ltd, "have helped create or operate blockchain-based services or have enabled virtual currency payments in the Russian financial sector, thus allowing possible sanctions avoidance." Similar to other companies of Cypriot interest on the list, Cypriot financial authorities are freezing financial activities and bank accounts associated with these entities. 

Credit

The recent update of the sanctions list prompted a response from the US Embassy in Nicosia, which helped alleviate government concerns and underscored positive cooperation with the United States. The collaboration announced between Cyprus and the US to combat money laundering is seen as a significant development in mitigating potential political and economic repercussions. The Presidential Office revealed plans for the two countries to cooperate in the realm of justice to bolster Cypriot authorities' capabilities in addressing illegal financial activities. Originating from Nicosia, the agreement sought American assistance in tackling illicit financial activities. Formalization of the cooperation will occur through the signing of a Memorandum of Understanding between the Federal Bureau of Investigation (FBI) and the Cyprus Police. This MOU aims to enhance collaboration between the legal systems of both nations, including relevant law enforcement authorities, the Republic's Legal Service, and the Financial Intelligence Unit.

Know-how

The new collaborative effort between Cyprus and the United States aims to combat money laundering and tackle the issue of sanctions evasion. The US Department of Justice has committed to sharing its expertise with Cypriot authorities in 2024, empowering them to proactively identify, investigate, and prosecute financial crimes linked to Cyprus. This partnership represents a substantial investment by the US in enhancing Cyprus' capabilities. Government officials have welcomed the agreement, viewing closer cooperation between the two legal systems as a positive step forward. Both sides anticipate positive outcomes from this collaborative effort.

Occupied territories remain a 'black hole'

As the Cypriot government grapples with mitigating the political and economic impact of Cypriot-based companies on the sanctions list, the occupied territories emerge as a "black hole" in efforts to combat illegal financial activities. A surge in the real estate market is seen as a common method of money laundering. A report by the German television network DW sheds light on developments in the occupied areas. Iranians and Russians, predominantly, are purchasing apartments in Trikomo for as low as 60,000 euros. These apartments, as per the report, are either sold afterward or rented out. The occupied territories are depicted as a haven for illicit funds, as European laws are not enforced. In specific areas of the occupied territories, there is a construction boom, benefiting foreigners who make purchases, even in cash, without risking inquiries about the source of their funds, the DW report suggests.

[This article was translated from its Greek original and edited for clarity and brevity]

TAGS
Cyprus  |  USA  |  money laundering  |  business

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