Cyprus banks more vulnerable to money laundering than first thought

16 May 2013

The banking system in Cyprus, which is currently being reconstructed under an international bailout, is more vulnerable to money laundering activities than was previously thought.

This comes from a report commissioned as a condition of the international bailout by auditor Moneyval and financial advisory firm Deloitte.

According to the report, the due diligence and safeguards that have been put in place by Cypriot banks are insufficient in some cases.

"The data included in Deloitte's analysis exposes deficiencies in the implementation of preventative measures by the audited institutions," the report said.

In the summary of the report, Cypriot banks were found to have flagged no suspicious transactions to regulators between 2008 and 2010 - with regard to customers included in the assessment - and just one in 2011 and "a few" in 2012.

Cyprus received a first aid payment of €2 billion ($2.57 billion) on 13 May and may obtain as much as €1 billion more in June from the European Stability Mechanism.

By Asim Shah

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