Financial Transparency Coalition

The bail out of the troubled banking sector in Cyprus has taken on serious political overtones as the crisis deepens. During the past few weeks Cyprus has been accused of failing to combat money laundering and fraud and that Russian oligarchs seek refuge for their money in this “tax haven” country.

LONDON - The Observer alleged today that one of the key companies involved in the horsemeat scandal was set up such that it hid the names of the people who own and control it. "This illustrates why hidden company ownership is such a problem," said Rosie Sharpe, campaigner at Global Witness. "Criminals – whether they be fraudsters passing horsemeat off as beef, arms dealers fuelling wars, or corrupt dictators nicking their country’s wealth – need to hide their identities, and at the moment it’s all too easy to do this by setting up a company.”

Cyprus's teetering economy needs a significant injection of bail-out cash from its European Union partners. However, a group of countries, led by Germany, is baulking at the prospect of propping up what many regard as a money-laundering haven. A bail-out package, it is argued, could see eurozone taxpayers footing the bill for protecting the offshore banking deposits of criminals. European leaders are arguing that Cyprus should have to beef up its anti-money laundering controls in order to qualify for any bail-out package.

Over the last few months, an aid program (read: bailout) for Cyprus’ banks put together by EU rescuers has met mounting resistance among Europeans. The reason? Money laundering... and the alleged ties of Russian oligarchs to Cyprus’ banks. There does seem to be a questionable relationship there. Last fall, Der Spiegel reported on Germany's Federal Intelligence Service’s (BND) secret report on money laundering in Cyprus. According to Der Spiegel, the report finds that the people who would benefit most from a European bailout of Cyprus banks are Russian oligarchs, mafiosi, and businesspeople who have parked illegal earnings in the small...