Money launderers still not hung to dry


High risks of money laundering, errors in bank records, missing identity checks and obscure customer records are all rampant in Cyprus’s banking sector, according to a leaked EU report that could trouble the conditions of the country’s €2bn taxpayer-funded bailout package.

At the request of eurozone finance ministers, EU monitoring body Moneyval and US accountancy firm Deloitte investigated the activities of six Cypriot banks and their biggest clients and drew up the report in April.

A leaked version of the report’s summary, published over the weekend by Cypriot website Stockwatch, shows 58 per cent of one bank’s clients pose a “high risk” of money laundering and almost a third of all bank depositors’ records contain errors.

Other findings suggest that file information on 27 per cent of depositors and 11 per cent of borrowers displayed “inaccurate information on the customer and beneficial owner”, that identities of customers were unclear in up to 75 per cent of international business cases, and that proper ID checks on “complex” structures were carried out in only 9 per cent of all cases.

EUObserver questions whether Cypriot banks are effectively monitoring their own clients, since the banks

"launched just four internal probes on potential money laundering [...] between 2008 and 2012. They reported zero ‘suspicious transactions’ to Cypriot authorities in 2008 to 2010, one in 2011 and ‘a few’ in 2012. But Deloitte identified 29 of them in the last 12 months alone."

The site says the report “gives the lie to Cypriot diplomats and politicians who have been telling media in recent months the island adheres to international standards” and also suggests a potential problem for German Chancellor Angela Merkel, who vowed to clean up Cyprus as German MPs approved the EU bailout package.

EUObserver quotes an unnamed diplomat looking ahead to September’s elections: “If German people saw the report, they might say: ‘I would not give my money to such a country.’”