Gold Magazine February - March 2013, Issue 23 | Page 38

interview

CYPRUS IS NOT A MONEY
LAUNDERING CENTRE OR
A TAX HAVEN. IT IS A LOW-TAX
JURISDICTION
have very clear and clean procedures for money
transfers. No bank can perform a transfer of
money that is a result of illegal activities as
there are very strict controls in place, controls
that are implemented all over the world. If
a bank receives money through one of the
international banks, there is no concern
about money laundering. In the past there
were suspicions that people were physically
transferring illegal money in their luggage but
this has not been possible in Cyprus for many
years because no bank will accept a deposit
in cash of more than €10,000 if it does not
know the source, the owner, etc. In that sense,
money laundering is not possible in Cyprus.
Gold: Cyprus has also recently le gislated for
closer supervision of companies other than
banks dealing with the financial sector.
G.V.: Indeed, since the House of
Representatives passed the Fiduciaries law, the
Cypriot Securities and Exchange Commission
(CySEC) is, for the first time, authorized to
supervise every company that is involved in
international business. A fiduciary is a person
who has undertaken to act for or on behalf of
another in a particular matter in circumstances
which give rise to a relationship of trust,
confidence and loyalty. The new supervision
regime will ensure knowledge of the role,
qualifications, etc. of every person who acts as a
fiduciary and the real owner of every company,
trust etc. This law puts in order the provision
of corporate, trust and fiduciary services and
it enhances the much-needed confidence
of international investors and clients to
use Cyprus in their international business
planning. The prestige of the CySEC is high
although relatively new compared to other
authorities abroad. If the full implementation
of the new law takes place quickly, I think that
the reputation of Cyprus as an international
financial centre will be substantially improved.
Gold: Isn’t it also unfair to claim that
Cyprus is a money laundering centre when
such serious cases have been discovered in
countries such as Germany, the USA, the
UK etc?
G.V.: It is indeed very unfair, especially the

assumption that Russian money is connected
with money laundering. Money laundering
can and indeed does take place, effected by
people of all nationalities. In the USA, nobody
worries about money laundering from Russia
because they worry about money laundering
from Latin America. There is drugs trafficking
all over Europe and that is how billions are
moving around. Why talk only about Cyprus
and Russian money? All kinds of illegal
activities are going on around the world that
are worth many times Cypriot GDP but
nobody talks about that. At the moment,
only Cyprus is being blamed and the rest are
being ignored. We may reject the accusations
but, at the same time, we should make sure
to strengthen our regulations and implement
them in such a way that nobody can accuse us
of anything. That is the essence of the matter.
Gold: Another recent issue - especially in
Germany - is whether Cyprus is of systemic
importance for the euro area or the EU and
hence worth bailing out. What is your view
on that?
G.V.: This is not a serious argument. It has
indeed been raised but many European officials
and analysts have clarified and highlighted the
systemic importance of Cyprus. I’m referring
to Oli Rehn’s pertinent statement as well as the
information leaked in the German Press about
the ECB President’s view that Cyprus is indeed
of systemic importance for the euro.
Gold: Even if Cyprus were not to be
considered of importance for the euro, does
it really matter? The European vision is
supposedly all about solidarity.
G.V.: Even if Cyprus is not systemic for the
euro, providing financial assistance to the
island which has suffered huge losses because

I AM PREPARED
TO TAKE A BET THAT,
IN 2014, CYPRUS’
GDP WILL SHOW
POSITIVE GROWTH

36 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

of the Greek haircut is a must. In my opinion
Cyprus is of systemic importance but this is
irrelevant. When Germany and other countries
insisted on the Greek PSI, they made it very
clear - and repeated again and again - that
Greece was an exceptional case. Therefore the
fact that Cyprus has suffered as a result of that
decision cannot be neglected. The EU leaders
cannot say that Cyprus is of no importance.
That would destroy the euro area because it
would bring its credibility into question again.
Gold: The optimism that followed the
initial political agreement with the Troika
on the MoU might have been justified at
that point. What about now? Does the
debate about Cyprus’ debt sustainability, its
systemic importance, etc., put the bailout in
question?
G.V.: There should be no worries on that
score. As the date of the presidential elections
in Cyprus approaches, I believe that the
euro area countries have taken the decision
to delay the signing of the MoU until a new
government takes power. I can understand
this, particularly after the various statements
made on behalf of the current government
which have puzzled Europe.
Gold: Shouldn’t all the political parties in
Cyprus be committed to the Memorandum?
G.V.: The interesting thing is that everybody
is committed anyway! All the memorandum
legislation was unanimously or almost
unanimously approved by Parliament. This
is a fact. All that is missing as we speak is the
amount of funds needed for the banking
sector.
Gold: So your view is that there is no reason
to worry about the finalization of the MoU?
G.V.: No reason at all. On what basis
would our European partners refuse to
provide financial assistance to Cyprus when,
immediately after the in principle agreement
of the MoU, Cyprus prepared, approved
and implemented all of the proposed MoU
legislation? The EU should act on legal
grounds and there are no legal grounds to
refuse financial assistance to Cyprus.
Gold: Financial assistance to Cyprus will
undoubtedly be given but the question
is ‘how much?’ We now have to face the
debt sustainability problem that has been
emphasised by the IMF.
G.V.: That is another non-serious issue. We
and the rest of the international community
have the tendency to create problems out of
nothing. What is debt sustainability? There
are so many ‘ifs’ in this matter that the whole