Cleaning up the money launderers

Date: 11/06/1998

By John Carr

IMPENDING membership of the EU has set in motion a drive by the Cypriot government to clean up the island's dubious reputation as a money laundering centre.

Foreign Minister Ioannis Kasoulides said recently that since the government set up its unit for combating money laundering in January 1997, more than 70 cases had been examined, with 22 disclosure orders and four freezing orders issued.

Shipping and banking interests make up the vast bulk of Cyprus' offshore economy and are estimated to account for up to one fifth of the country's entire economy.

Kasoulides played down allegations that EU offshore companies have been moving to Cyprus en masse to take advantage of allegedly lax money laundering laws.

“The existence of offshore companies does not necessarily mean the island is used as a money laundering centre,” he said.

He added, however, that since Cyprus was serious about joining the EU in the next wave of enlargement, his country intended “to conform to the European Union's major goal of safeguarding quality of life”.

This year, the Bank of Cyprus ordered all commercial banks to tighten up reporting and monitoring procedures and banned them from granting anonymous and numbered accounts to clients.

The Cypriot Shipowners' Association, meanwhile, has said it will take steps against so-called 'ghost owners' who assign nominal management of their vessels to low-level employees and “disappear whenever a casualty occurs”.

The precise number of such operators remains unclear, although it is almost certain that their management methods have been largely responsible for several maritime disasters involving ships under the Cypriot flag.