26 Cypriot Law Firms Investigated For CIP-Related Compliance Violations: Five Already Found Guilty
Image credit: Clerides Legal
The Cyprus Bar Association (CBA) has conducted 26 audits of law firms for allegations of violating CBA provisions and EU directives on money laundering, according to In-Cyprus.
The CBA’s Council and Disciplinary Board has already found five firms guilty, issuing a non-compliance fine to all of them while serving a further four firms with indictments.
Another five firms face investigations as well, as the CBA’s AML Committee is currently examining their cases.
The investigations are looking into how firms handled client due diligence, as CBA President Christos Clerides clarified when he announced the matter in August 2022.
“This [inquiry],” said Clerides, “entails a thorough investigation into who their client is, their history, if they are politically exposed persons, if they have ever been convicted of a crime, or if they are wanted in their country or any other part of the world.”
Clerides highlighted what the standard process should consist of before lamenting that the preliminary investigations the CBA conducted found that many firms or individuals did not adhere to them.
“This means that every lawyer dealing with these issues must create a financial profile of the client, know what their income is, and whether they have the ability to invest the money for investment purposes […] In most cases we looked at, unfortunately, these two aspects were poorly checked, resulting in convictions and fines.”
After the CBA’s audit of 26 firms, Clerides announced that the association had collected over €200,000 in non-compliance fines while also revealing that the number of complaints being filed against Cypriot lawyers for misconduct has risen notably in the past few years.
The year 2022 reported 165 complaints, a record number since 2009. Clerides noted that the CBA registered 1,785 complaints between 2009 and 2023, and that it had observed a sharp increase in the past three years.
The audits come at the tail end of a number of turbulent years for Cyprus CIP stakeholders, which have seen the government launch inquiries into both advisors and investors and even revoke 222 citizenships of the latter group.
In related news, the Nicosia Criminal Court recently postponed – again – the so-called Golden Passport Trial, a criminal proceeding against former House president Demetris Syllouris, former Akel MP and developer Christakis Giovani, Senior Lawyer for the Giovani Group Antonis Antoniou, and lawyer Andreas Pittadjis, to the 26th of April 2023.
The defendants face five charges, including influencing a public official in violation of the laws criminalizing corruption and conspiracy to defraud the Republic.
Timeline of the Cyprus CIP’s termination and its aftermath
- May 2019 – MONEYVAL report highlights AML risks within Cyprus’ CIP
- February 2020 – Cyprus’ attempts to revoke 26 citizenships failed due to a lack of the required legal framework and legislation.
- June 2020 – Cyprus’ government approves a host of sweeping changes to its CIP to mollify EU concerns.
- August 2020 – Al Jazeera publishes their infamous Cyprus Papers; The Cypriot government responds by alleging geopolitical bias claims.
- October 2020 – the EU launches infringement procedures against Cyprus (and Malta). Cyprus subsequently decides to terminate its program.
- November 20202 – Cyprus officially shuts down its CIP for good, and government begins its investigations.
- May 2021 – Cypriot prosecutor opens criminal investigation of unnamed CIP advisors; claims arise to indicate over half of the 6,779 passports issued through the program were obtained illegally.
- October 2021 – The Cypriot government revokes 45 citizenships obtained through investment.
- January 2023 – The number of total citizenship revocations reaches 222
Ahmad Abbas is Director of Content Services at Investment Migration Insider and a six-year veteran of the investment migration industry.