By Stelios Orphanides
The Central Bank of Cyprus is likely to issue new and stricter guidelines to supervised lenders governing anti-money laundering requirements as early as next week, a source familiar with the matter said.
“There are two areas that need to be addressed more effectively,” a source familiar with the matter said in a telephone interview on Tuesday. “One concerns shell companies, which essentially are not engage in any business (activity) but are used to transfer funds from one place to another. The other serious issue concerns business introducers where things have to get stricter”.
While the Central Bank of Cyprus has not taken its final decision about the specific contents of the new anti-money laundering guidelines, the new measures come days after the US praised Cyprus for its recent efforts in combatting financial crime.
On Friday, the Treasury Assistant Secretary for Terrorist Financing Marshall Billinglea had meetings with central bank governor Chrystalla Georghadji, finance minister Harris Georgiades and foreign minister Nicos Christodoulides.
Billingslea discussed with them “the positive improvements and reforms that Cyprus has made in its anti-money laundering regulations and regulatory oversight,” the US embassy in Nicosia said in a statement on its website. “Discussions also explored areas where the United States and Cyprus can continue to partner to fight threats to the international financial sector”.
“Positive, long-term economic development requires a strong and well-regulated banking sector,” the statement said. “It is vital that illicit actors know that Cyprus is not open for business. The US was encouraged by the commitments made by Cypriot officials today and will continue to work together to combat corruption, money laundering, and other financial threats”.
A year ago, Georghadji said that the US Treasury had threatened in July 2014 to ban the entire banking system of the island from transacting in US dollar unless authorities took action against the Cyprus branch of FBME Bank, which it described as a financial institution of primary money laundering concern. The central bank subsequently placed the lender under administration and subsequently under resolution.
“We got the message and it is up to us to do what we have to do to get results,” the source added.
In December 2013, the Central Bank of Cyprus issued its fourth directive on the prevention of money laundering and terrorist financing in an attempt to strengthen compliance in the banking sector. The new directive was based on the recommendations of an audit requested by Cyprus’s international creditors who financed its 2013 bailout.