Malta and Cyprus face growing pressure over money-laundering

Martin Everson

Offshore Consultant
Business Angel
....and we wonder why Malta just decided to close Satabank immediately when they get pressure from U.S who could cut your small island off from dollar access and collapse your economy overnight. Remember the majority of international trade and finance is still conducted in dollars :(. Plus both Malta and Cyprus economies mean nothing to EU just like Latvia's so no help will be coming. Also Bank of Cyprus has Russians dirty money clients as major shareholders due in part to the bail-in of Russian depositors during 2013 Cyprus Banking Crisis . U.S could indirectly pull plug on these small islands like they did with Caribbean islands :(.

Malta and Cyprus face growing pressure over money-laundering

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Trouble for the European Union’s two smallest economies



Jan 24th 2019

Marshall billingslea, the American Treasury official in charge of tackling money-laundering, visited Cyprus in May 2018 with a stern message. His office had recently accused ablv, Latvia’s third-largest bank, of laundering Russian money and starved it of American dollars, forcing it to close. Clean up your banks, Mr Billingslea is said to have told Cypriot officials, or they will be next. Later that summer another Mediterranean island felt similar heat from European officials, who said there had been serious regulatory gaps in Malta’s handling of scandal-hit Pilatus Bank.

The European Union has been jolted by money-laundering scandals over the past year. The one uncovered at the Estonian branch of Denmark’s Danske Bank is reckoned to be among the largest in history. Pressure has grown on European countries to take action. A lot of it has fallen on Malta and Cyprus, respectively the eu’s two smallest economies, which have acquired a reputation for financial sleaze. A European Commission report on the sale of passports, released on January 23rd, warned that the pair’s investor citizenship schemes expose the rest of the eu to money-laundering risks. Some complain that the countries have been unfairly singled out because they are small. Both say they are now cracking down. But many wonder if this is compatible with their continued enthusiasm for offshore banking.

Cyprus has been a haven for Russian money since the 1990s. But American officials are now looking at it with renewed interest, as they seek to curtail Russia’s influence in the West. There is much to worry them. Viktor Vekselberg, a Russian oligarch under American sanctions since April, owns 9% of the Bank of Cyprus, the country’s largest bank. The country’s name has also cropped up frequently at the trial of Paul Manafort, Donald Trump’s former campaign chief, who is charged with fraud.

The reputation of Malta’s financial sector—newer than Cyprus’s and, for now, too small to trouble America—began to sour in 2017. Daphne Caruana Galizia, an investigative journalist, alleged that Malta-based Pilatus Bank was laundering millions for Azerbaijan’s ruling family, while Maltese officials took bribes to turn a blind eye. (They deny this.) Ms Caruana Galizia was killed by a car bomb in October 2017. Her murder shocked the European Commission into action. It told the European Banking Authority (eba) to look into Malta’s supervision of Pilatus Bank a week later.

Regulators are already showing some improvement. The Central Bank of Cyprus (cbc) forbade banks to deal with shell companies in June. Malta has increased the budget of its anti-money-laundering regulator six-fold.

But many are sceptical about both countries’ efforts. Panicos Demetriades, the cbc’s former head, says industries that have sprung up around the banks, including “politically well-connected” law firms, remain mostly untouched. As for Malta, the commission told its regulators in November to “step up” their implementation of the eba’s suggestions, warning that failure to meet deadlines could lead to hefty fines. Their citizenship-by-investment schemes also attract criticism. They are the lone eu members on a blacklist maintained by the oecd, a group of mostly rich nations, of countries whose “golden passport” schemes make tax evasion easy.

This contrasts with Latvia’s contrition after the closure of ablv. “We realised we had to do much more to clean up our financial sector,” says Liga Klavina, an official at the finance ministry. Since February, the proportion of deposits in Latvia belonging to non-residents has plummeted from 40% to 20%. The figure in Malta is 45%.

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countryfree

Building Trust
Entrepreneur
The more I read about the future, the more I see it as frightening. Banks, google, governments will know everything about you. People already see me as a freak, because I'm not on facebook, but I'm proud not to be. I'm also proud not to pay any income tax, and I'm happy to say it's possible. I see a fantastic future for bitcoin. I know most people like their nanny state, they want to live in a controlled environment, where's everything and everyone is regulated, but I enjoy living in the wild wide world.
 

Martin Everson

Offshore Consultant
Business Angel
The more I read about the future, the more I see it as frightening. Banks, google, governments will know everything about you. People already see me as a freak, because I'm not on facebook, but I'm proud not to be. I'm also proud not to pay any income tax, and I'm happy to say it's possible. I see a fantastic future for bitcoin. I know most people like their nanny state, they want to live in a controlled environment, where's everything and everyone is regulated, but I enjoy living in the wild wide world.
Your one of the last people that understands what freedom is thu&¤#. Unfortunately we live in a generation where convenience and security is more important to some than privacy and freedom :(. I also live tax free and fortunate to have the ability from being in a tax free country. I would rather not have any tax I would pay used to wage hegemony like the U.S does :(.
 

countryfree

Building Trust
Entrepreneur
Your one of the last people that understands what freedom is thu&¤#. Unfortunately we live in a generation where convenience and security is more important to some than privacy and freedom :(. I also live tax free and fortunate to have the ability from being in a tax free country. I would rather not have any tax I would pay used to wage hegemony like the U.S does :(.
Thanks! I live in several countries, so that helps a lot. I'm a tourist in countries with high tax, while I'm officially living in countries which do not tax foreign income. Now, besides income tax, I still pay property tax, VAT, and a lot of gas tax as I'm driving a fast car (non-exhaustive list).
 

Mark Rucken

Building Trust
Entrepreneur
When it comes to shelf (offshore) companies, Cyprus is a finished story. This was well known back in May last year, so I feel bad for people who were spending months and lots of money to get an account.

In Malta, it is not that bad, but I expect in 2019. they will start closing all shelf accounts.
 

7889

Building Trust
Entrepreneur
When it comes to shelf (offshore) companies, Cyprus is a finished story. This was well known back in May last year, so I feel bad for people who were spending months and lots of money to get an account.

In Malta, it is not that bad, but I expect in 2019. they will start closing all shelf accounts.
Yep, even in Georgia, which is quite liberal, any offshore company account is a big no-no, partly i think because they are promoting their own local tax-free companies.
 

Martin Everson

Offshore Consultant
Business Angel
Yep, even in Georgia, which is quite liberal, any offshore company account is a big no-no, partly i think because they are promoting their own local tax-free companies.
Yes I realized this also. I had to switch to a Georgian company early last year for my TBC and BOG accounts.
 
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