Cyprus is the third largest and third most populous island in the Mediterranean. It is located south of Greece and east of Turkey. The country has been a member state of the European Union since 2004 and of the eurozone since 2008.
In recent years, and in particular following the financial crash and subsequent bailout, Cyprus has often been criticized for its alleged involvement in financial crime activities resulting from its offshore sector. Since the 1990s, Cyprus has regularly been mentioned in relation to financial crime activity investigations, specifically regarding funds coming from Eastern European countries. Recently, Cyprus featured in the Securities and Exchange Commission (SEC) investigation into HSBC’s money laundering activities whereby the country appeared as a conduit and was used to set up shell companies through which to channel illegal funds.
By outlining the political background of the country’s current situation, the development of its financial center and the efforts which have been undertaken in recent years, we can better understand and ensure compliance, regulatory oversight and ultimately attain more overall stability for the islands’ financial system and make it less vulnerable to financial crime activity.