Cyprus stands ready to undergo any inspection on its anti money laundering legal framework, Finance Minister Vassos Sharly told Dutch lawmakers, adding that Cyprus has nothing to hide.
Sharly, accompanied by representatives of the Central Bank of Cyprus, the Finance Ministry and the head of Anti-Money Laundering Unit appeared before the Dutch Parliamentary Committee of Finance in a bid to rebuff accusations against Cyprus over money laundering.
Responding to questions by Dutch MPs, Sharly pointed out that the IMF has conducted a check on the Cypriot anti-money laundering and taxation framework in 2012 at the request of the Cypriot authorities, adding that the Council of Europe’s Moneyval organisation inspected both the anti-money laundering legal framework as well its implementation.
"If anybody suggests they should come back tomorrow I say no come back today, we are ready. We have absolutely nothing to hide," Sharly said, pointing out that there is misconception with regard that the implementation of the Cypriot legal framework has not been evaluated.
Eva Papakyriakou, head of the Anti-money laundering Unit said that the CoE’s Moneyval unit has evaluated Cyprus` both legal framework and its implementation for the fourth time and she also described unsubstantiated accusations as unfair.
"There is no country which has the best system. If you show one country which has the best system and have fought criminality completely then I will move to this country because it is a paradise," she said.
Finance Minister Representative Kikis Pafitis rejected the notion that Cyprus is a tax heaven.
"The 10% tax rate is catchy but essentially when one takes into account other taxation such as dividend tax, the Cypriot tax reaches 20%," he said.
Central Bank representative Maria Themistokleous said the CBC request from the commercial banks to submit monthly reports on deposits and carries out meetings with the banks` internal auditors and the compliance units on anti-money laundering laws. She noted that the banks are requested to have in place an automated system, which could provide timely information on the identity of the clients and analyze their accounts and transactions.
Russia may contribute to the Cypriot bailout only with the same terms
Furthermore, Sharly pointed out that statements made recently by Russian senior officials, including Premier Dmitry Medvedev last Monday, suggest that Russia intends to participate in the Cypriot financial assistance programme estimated at 17.5 billion.
"At Eurogroup level there is some discussion and therefore is something that we believe that if the Russians want to come in they will come in with exactly the same terms as all the others, there is no question of the Russians coming in on different terms," he said.
On the issue of the extension of the 2.5 billion worth loan that matures in 2016, Sharly said that Cyprus has submitted a request for its extension until 2021.
"We have put a very good case to the Russians, it should be extended it is in everybody’s interest, they showed willingness to do so, I believe the Russian leaders during the last month or so on the 20th of December in fact they made some comments, Putin himself that they would be willing to accommodate our request but it has to be examined first," he said.
On the issue of privatizations, Sharly said the issue has been agreed upon and was included in the Memorandum of Understanding agreed with the Troika of the European Commission, the European Central Bank and the International Monetary Fund.
He said privatisation would be considered if the public debt will not be considered as sustainable, noting that Cyprus has charted various actions should the debt exceed sustainable limits, including privatisations and bail in, that is the conversion of bank bonds to stocks.
To a question on the estimated income from privatisations, Sharly said the fields to be considered could be Electricity, the telecommunications and the Port Authority, adding that these areas could yield "substantial revenues".
"The estimate is minimum of 1 billion and maximum realistically might be something between 1 and 2 billion in total. One billion is not a lot and two billion is not a lot but then is could be as much as, say, 10 percent of GDP which is significant when you have this particular problem and you got to dispose of government assets in order to reduce you national debt," he said.
Sharly described a view expressed by a Dutch MP that Cyprus has total deposits amounting to 15 billion euro as exaggeration, noting that of total deposits of 70 billion, Russian capital is approximately 15 billion.
Furthermore, Sharly rebuffed accusations that the financial assistance programme will be used to bailout capital of Russian capital, noting that up to 10 billion euro of the estimated 17.5 billion euro will be used to recapitalised the banks, which have reported mammoth losses following the haircut of the Greek sovereign debt.
"The money that has been lost on a single night it was about 4.5 billion but other losses arose from the Greek economy. The exposure of the banks is not just is the investment in sovereign debt, it was also lending to Greece," he added.
Sharly acnowledged that the Banks expanded too much to Greece, noting that the Central Bank has commissioned consultants to provide suggestions for the reduction of the sector. The assets of the three Cypriot banks are five times bigger than the islands GDP.
Cyprus applied on June 25 for financial assistance from the European Stability Mechanism estimated at 17.5 billion euro which is equivalent of its GDP. The programme is expected to be agreed on Eurogroup level on March.
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