Cypriot banks lose business due to delays in due diligence checks

Xinhua News Agency | May 17, 2019 at 11:11 AM

NICOSIA, May 17 (Xinhua) -- Cypriot banks are losing business because customers opt to carry out their lawful transactions elsewhere as due diligence checks take longer in Cyprus, new Central Bank of Cyprus (CBC) governor Constantinos Herodotou said on Friday.

In his first public intervention since taking up his duties on April 11, Herodotou urged Cypriot banks to implement innovation to speed up their procedures.

"The banks should invest in staff training and technology for more effective combating of money laundering, reducing negative impact on lawful activities at the same time," he said while addressing an event organized by the Cyprus Chamber of Commerce and Industry.

He said CBC was willing to collaborate with commercial banks with a view to finding ways to tackle the issue of delays in an efficient manner.

Chamber of Commerce president Christodoulos Angastiniotis said he was concerned that business people turn to other banks abroad to have their activities carried out faster.

Herodotou replied that Anti Money Laundering (AML) directives do not focus on where the money comes from but on whether the activities are lawful or not, adding that the CBC is ready to examine any ambiguities in the AML laws.

He added that the CBC will continue the work to improve Cyprus' image abroad that would provide the banks with more options concerning correspondent banking.

On the broader combating of money laundering, Herodotou said that there has been progress, noting that the efforts to improve Cyprus' AML framework should continue "as there will always be efforts to beat the system."

Cyprus was among EU countries which were criticized by the European Commission for holes in the AML procedures, which led to additional measures that forced many depositors, mostly from Russia, to withdraw their money from Cypriot banks.

Herodotou said that the CBC is also mindful of Cyprus' high private debt which is declining at a slower pace, as lenders are concentrating on offloading of non-performing loans. He urged the lenders to turn their attention to the high private debt as well.