A team of international experts are making a review of anti-money laundering practices in Cyprus applied mainly by law firms, banks, accounting and audit firms, financial services firms and offices involved in the investment-for-citizenship scheme, sources with knowledge of the review said on Saturday.
The team comes from the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, commonly known as Moneyval.
This is the fifth time Moneyval conducts a review in Cyprus, the latest having been done at the height of the financial crisis in 2013.
Its report expected at the end of the year is of crucial importance for the image of Cyprus in relation to anti-money laundering practices applied both by the state and private firms associated with international transactions.
Criticism of Cyprus for inadequate measures to fight money laundering led to the introduction of stricter due diligence check that led to the capital flight, most of which allegedly belonged to Russian so-called oligarchs.
The European Commission also warned Cyprus in January that its program for the issue of passports and visas to foreigners in exchange of investment could help organized crime infiltrate the European Union and raised the risk of money laundering, corruption and tax evasion.
Finance Ministry sources were quoted as saying that the government is relying on a positive report by Moneyval so as to preserve investor confidence in Cyprus.
Cyprus introduced stricter due diligence checks as to the origin of money transferred to or through Cyprus but this has led to delays in concluding transactions, which alarmed businessmen.
An official of the Cyprus Chamber of Commerce and Industry said on Thursday that he was concerned over the impact of the delays, saying that Cypriot banks lost income as customers turned to other countries.
Central Bank’s new chief, Constantinos Herodotou, urged the banks to invest in technology and training of staff to do away with due diligence check delays. He also advised them that the country of origin did not matter as the law requires due diligence about the business origin of the money but not the country.
He advised banks to be always on the alert as there will always be efforts to beat the system.