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EU audit on Cyprus money laundering – whitewash in the making?

EU Observer

Auditors on an EU-sponsored mission to see if Cypriot banks launder money for Russian criminals began work last Wednesday (20 March).

The project has slipped out of view amid dramatic talks on Cyprus’ new bailout.

But it is likely to come back with a vengeance when the Dutch, Finnish and German parliaments vote in April on whether the EU should lend Cyprus the €10 billion it needs.

The German government pushed for the probe in the first place because the Social-Democrat opposition threatened to veto a Cypriot rescue on money laundering grounds.

“This is a matter of concern … for public opinion in several of our member states,” European Commission chief Jose Manuel Barroso noted on Monday.

There are two units doing the job.

One is Moneyval, a specialist branch of the Strasbourg-based Council of Europe, whose top man, John Ringguth, a former British prosecutor, was in Nicosia last week to kick things off.

The other is a “private international audit firm” to be hired by Cyprus’ central bank.

The auditors’ terms of reference (what powers they have, which banks they will check) are “confidential,” to use the phrase of one German official.

Moneyval told EUobserver its task is to “focus exclusively on the effectiveness of Customer Due Diligence (CDD) measures in the [Cypriot] banking sector.” In other words, to see if banks check who their customers really are.