The EUObserver published an abridged version of our article that appeared earlier in “Lawyer Monthly”, about how the USA has had to apply mounting pressure on Cyprus to interdict the operation of the “Cyprus business model”.
This business model is the interaction of several factors:
- the passport regime whereby foreign investors can obtain a Cyprus – and therefore an EU – passport in exchange for investing in real estate;
- the domestic tax regime;
- the Double Taxation Treaties that Cyprus has signed with non-EU countries, notably Russia;
- the ease with which Cyprus-resident companies can be set up;
- the plethora of company formation agents and legal firms available to set them up;
- the ownership of many such agents and firms lying in the control of Cyprus’ political elite;
- the willingness of Cyprus’ banks to open accounts for these companies and to make their international payments for them.
Cyprus’ banks have featured prominently in the Paul Manafort case (principally Bank of Cyprus) and Liberty Reserve (Hellenic Bank).
Both banks are immune to FinCen 311 Notices because they are systemically important in Cyprus, so the USA’s leverage has to be brought to bear on a government-to-government basis, and let’s see if they are successful.