CYPRUS is going on the counter-attack over money laundering allegations with political parties embarking on a campaign abroad to convince people that such claims were unfounded.
The decision, taken by parliament yesterday, is for party representatives to seek meetings with parties they are affiliated with in other countries.
Parliament will also look into organising a mission to countries, like Germany, where most of the allegations have come from. The task will be to explain the situation and the measures, which are in place in place to prevent money laundering.
German lawmakers, who would have to approve a bailout for Cyprus, have voiced strong concerns about a rescue for Cyprus because of its reputation as a popular tax haven for wealthy Russians.
Similar statements have been made by German government officials.
In November, Germany’s Der Spiegel had cited a German intelligence agency report as saying “Russian oligarchs, business people and mafiosi” would benefit most from any bailout and that Cyprus was a “gateway for money laundering in the EU.”
Cyprus has denied the allegations, saying it was doing more to fight money laundering than other eurozone countries.
In an op-ed published by the Financial Times on Tuesday, Central Bank Governor Panicos Demetriades said Cyprus had tightened its anti money laundering laws since joining the EU in 2004 and currently has more measures in place than other eurozone nations.
“Transparency and exchange of data are in line with OECD requirements, and we feature on its “white list”. Moneyval – Council of Europe experts – has rated Cyprus’s measures to prevent money laundering as being of a high standard, outranking several eurozone nations,” Demetriades said.
The governor said the island had one of Europe’s most competitive corporate tax regimes but there was a difference between tax havens and low-tax jurisdictions like Ireland, Luxembourg and Cyprus.
“The former often have zero-tax, lax company registration processes and avoid signing double-tax treaties that would require an exchange of information between tax authorities. None of these characterises Cyprus,” the FT article said.
And Cyprus’ services were not only used by Russians.
“For example, of the 80 or so shipping-related companies based mainly in Limassol, 36 are German and only three are Russian,” Demetriades said.
Meanwhile, the government yesterday called for an end to the war waged against Cyprus regarding transparency.
Asked if the government was prepared to accept a European inspection – an idea floated recently — government spokesman Stefanos Stefanou said Cyprus had never refused any checks or reviews from authorised organisations from the EU, the Council of Europe or elsewhere.
“And such checks have been carried out recently and in the past,” Stefanou said.
In a report about Cyprus, the Nomura financial services group suggested German politicians would likely back down in two to four months following “concessions in terms of financial/Anti Money Laundering regulations and, perhaps, some clever political manoeuvring from Chancellor (Angela) Merkel, who will likely want to avoid a new round of contagion in the periphery during her electoral campaign.”
The recent idea of sending additional inspectors to Cyprus (supported by Germany, Austria, Finland and the Netherlands) for money laundering issues is an example of a gesture that could help overcome the concerns that have been raised so far. Any option that dramatically impairs the Cypriot economy through excessive financial regulation and potentially new forms of taxation, however, could permanently impair the capacity of Cyprus to ever repay back its official loans to the IMF, Russia and the ESM, Nomura said.
