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Suspect accounts closed at Bank of Cyprus UK

4 December 2013

The Bank of Cyprus UK has closed over 100 accounts by order of British regulators. The bank is subject to UK financial regulations and the accounts were closed because they were suspected of being used for money laundering, the governor of Cyprus Central Bank (CBC) has said.

CBC’s governor, Panicos Demetriades told a House Ethics committee that the accounts, mostly belonging to unnamed Cypriots, had been shut down as part of anti-money laundering checks on politically exposed persons (PEPs) who were considered high risk customers.

Although it is not known when the accounts were closed, AKEL MP Irene Charalambidou, who first brought up the issue, suggested that “those accounts were opened during a key time for Cyprus”.

An Inland Revenue official has said that they would be launching an investigation, the MP said.

According to the UK’s 2007 anti-money laundering regulations, “politically exposed person” is defined as any individual who has had a “prominent public function” by a state other than the UK, a community institution or an international body “at any time within the preceding year”.

“Politically exposed persons” can also include family members such as spouses and children and their spouses, or close associates are also considered to be PEPs, and regulations provide for increased monitoring and due diligence.

The definition of close associates includes individuals who have a close business relation or has sole or joint “beneficial ownership of a legal entity or legal arrangement” related to a politically exposed person. This includes setting up legal entities to benefit politically exposed persons.

Head of the South’s Watchdog Committee, Demetris Syllouris said they were meeting with the attorney-general’s office to discuss the matter further and had asked to receive more information about the accounts.

Avoiding saying if he would make public the data, he stated that “if there is any information that we must discuss publicly we will do so”. To date, Syllouris and the South’s House Ethics Committee have not revealed any names during the month-long discussions on bad banking practices.

The bank’s lack of proper supervision and poor quality governance was completely exposed after the EU bailout and the near-destruction of the South’s entire banking system. However, the Ethics committee has avoided pointing a finger even when specific individuals were identified and discussed in the media.

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