Cyprus in spotlight on Russia money laundering

Russia money laundering

Cyprus’ failure to go after Russian mafia money in its banks indicates it’s paying no more than “lip service” to international money laundering laws, a Dutch MP has said.

Pieter Omtzigt, from the christian-democrat CDA party, put forward the criticism in a letter, on Saturday (30 January), to a financial crimes unit in The Council of Europe in Strasbourg.

“Recent developments in Cyprus in relation to the Magnitsky case have shown the failure of Cyprus to apply money laundering legislation in practice,” he said.

“This case is a litmus test for whether Cyprus is now really paying attention to proper controls or whether it is only paying lip service to the recommendations.”

Sergei Magnitsky was a Russian anti-corruption activist killed in prison in 2009 after exposing a $230 million tax fraud.

The syndicate of Russian officials and hard criminals, the Klyuev Group, responsible for the fraud laundered millions via Cypriot banks. They also visited Cyprus several times, making the EU state “a central base for it in Europe,” Omtzigt noted.

Cypriot authorities say the case is still open.

But four years after Magnitsky’s former employer, Bill Browder, gave Cyprus black-and-white evidence of the financial transactions, it hasn’t recovered a cent or prosecuted anyone.

“Cyprus has a duty to enforce money laundering legislation and not be a weak link in Europe in relation to Russian corruption and organised crime,” Omtzigt said.

“There is every reason to monitor this country thoroughly,” he added, referring to Cyprus’ rating in Moneyval, a Council of Europe anti-money laundering body.

Moneyval already identified “serious deficiencies” in Cyprus in a report commissioned by the EU Council as part of EU bailout talks in 2013.

EU states at the time said they’d monitor Cyprus’ compliance with its recommendations.

The Dutch MP, who also sits on the Council of Europe’s parliamentary assembly, wrote after Cyprus helped Russia in a smear campaign against Magnitsky.

Cypriot authorities, in November, invited Russian officials on a joint raid on Browder’s law firm in Nicosia.

The raid is part of a posthumous anti-Magnitsky case trying to say that he stole the $230 million.

A Cypriot implementation document – dated 24 November 2015 and seen by EUobserver – on the Russian legal assistance request names Magnitsky, Magnitsky’s law firm, and Russian companies caught up in the embezzlement.

But Cyprus denies this.

“The request by the Russian government for legal assistance was not related to the Magnitsky case,” its foreign ministry told EUobserver in December.

It did not react to further queries.

Omtzigt said the posthumous prosecution is an example of Russia’s “legal nihilism.”

The EU previously described it as “disturbing.”

The US, on Monday, also highlighted the issue by adding four Russian officials, including a former deputy interior minister, to a blacklist for their part in the posthumous proceedings.

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