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Cypriot finmin says Cyprus is not money laundering hub
January 13, 2013 / 1:11 PM / 5 years ago

Cypriot finmin says Cyprus is not money laundering hub

BERLIN, Jan 13 (Reuters) - Cyprus is not a hub for money laundering and euro zone peers should decide quickly on the indebted island’s bailout bid, its Finance Minister Vassos Shiarly was quoted as saying on Sunday.

Cyprus applied for financial aid last June after its banks suffered huge losses on a EU-approved writedown of Greek debt, but some euro zone states have voiced unease about bailing out a country they say must improve financial transparency.

“Nobody has proved so far that we offend against the rules or even support money laundering,” Shiarly told Der Spiegel magazine in an interview. “We see our future as a serious financial centre. That’s why we want to be one step ahead of our European partners in financial market regulation in future.”

Shiarly said money laundering existed everywhere, including in Germany, but that Cyprus was fighting it resolutely.

In November, 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”.

But while German Chancellor Angela Merkel on Friday called on Cyprus to move forward with its own obligations and reforms, she also said European Union states must show solidarity, apparently giving conditional support to a bailout for the island.

Finance Minister Wolfgang Schaeuble said later on Friday that unless the Cypriot government could show it was sticking to money laundering rules “we have no desire for a race on who is willing to do something first”.

A potential rescue bill of 17 billion euros, equivalent to the country’s entire economic output, has deepened concerns among EU partners about Cyprus’s debts, and some doubt it would be able to repay the aid without more concessions from lenders.

A number of lawmakers from Germany’s parliament, which would have to approve any bailout, have already voiced concerns about a rescue for Cyprus, one of the bloc’s smallest economies and a popular tax haven for wealthy Russians.

Cyprus says it fully complies with international rules against money laundering and that its double-taxation avoidance treaty with Moscow and low tax rate give it a competitive edge.

Shiarly rejected demands to raise the corporate tax rate, saying it was discussed intensively when Cyprus joined the EU and found not to be a problem.

But European Central Bank board member Joerg Asmussen told Der Spiegel that Cyprus would need to do more before financial aid could flow.

“My impression is that improved transparency of the financial sector will be decisive for member states to agree to a programme,” Asmussen was quoted as saying.

The results of an asset review of Cyprus’ banking sector are due on January 18 and euro zone finance ministers will discuss the country’s aid request at a regular meeting in Brussels on January 21. No decision is expected from that meeting.

Shiarly said the island state’s parliament had agreed all conditions set by international lenders for a bailout.

“Given the uncertain situation, a quick decision by the Eurogroup is necessary to stabilise market confidence,” the finance minister added.

Ratings agency Moody’s slashed Cyprus’ credit rating by three notches to Caa3 late on Wednesday, taking it further into “junk” territory, and said it saw an even chance of a default.

Debt restructuring has been ruled out as an option by both Nicosia and Brussels, with European Economic and Monetary Affairs Commissioner Olli Rehn quoted as saying on Friday that a ‘haircut’ was not under consideration. (Reporting by Annika Breidthardt; Editing by Catherine Evans)

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