Negotiations about the bailout for Cyprus have stalled, not only because there are no signs whatsoever that Cyprus is willing to commit to a serious austerity program, but also because of accusations that Cyprus is lax on money-laundering. A study by the German foreign intelligence agency, the Bundesnachrichtendienst (BND), found that banks in Cyprus hold $26 billion (€20.33 billion) in deposits by Russian investors. According to the BND, most of this money has been illegally moved abroad to evade Russian tax authorities. Considering that the island’s entire annual GDP amounts to €17 billion, this is a tremendous amount of Russian investment.
Obviously, the Cypriot government denied the money-laundering accusations and argued that the country had effective money-laundering rules and adhered to EU law. Many people believe that the EU bailout would only be acceptable to the south as long as their banking system is not scrutinised too closely. To lend money without this scrutiny would be insane on the part of Brussels. Considering Brussels’s previous actions, however, it would be impossible to guess what they’ll let the south get away with.
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