MARCH 1995



Cyprus' location in the Eastern Mediterranean and its well developed
business, tourism, and communications infrastructure make it a popular
meeting point for drug traffickers.  Cyprus strictly enforces tough
antidrug laws in accordance with the 1988 UN Convention, which it
ratified in 1990.

Cyprus police and customs authorities cooperated closely with United
States authorities in 1994.  Cyprus officials are concerned that Cyprus'
offshore business sector is being used for international money laundering
activities, and monitors some monetary activities to deter such activities.

II.Status of Country

Cyprus' location in the Eastern Mediterranean and its close proximity to
Lebanon and Turkey make it a convenient transit point for Turkish and
Lebanese narcotics traffickers.  Cyprus' highly developed business and
tourism facilities, a modern telecommunications system, and a large
merchant shipping fleet further attract traffickers to Cyprus.
Traffickers conceal heroin and cannabis resin in the substantial
container traffic transshipped through Cyprus, and take advantage of air
connections to transship drug-related currency to and from Europe.

Although the Government of Cyprus (GOC) does not collect statistics on
drug use, authorities believe drug use in Cyprus is relatively low.
Hashish is the most commonly used drug, followed by heroin and cocaine.

Cyprus has also attracted over 15,000 offshore companies from all over
the world, over 2,000 of which are Russian.  Cyprus' success as an
international offshore center has made it vulnerable to international
money laundering activities, particularly by the Russian mafia, and other
organized crime groups.  The Cyprus Central Bank monitors monetary
activities to deter money laundering, but must rely on enforcement of
banking regulations to do so.  Cypriot law does allow for the
confiscation of drug-related profits, though this law has not been
actively utilized.

GOC customs officials, in cooperation with USG authorities, attempt to
monitor the flow of precursor chemicals that transit Cyprus to Lebanon.
GOC officials work closely with chemical brokers in Cyprus to monitor
chemical shipments.  Cyprus authorities believe diversion of chemicals to
illicit drug manufacturers is not a significant problem.

IIICountry Action Against Drugs in 1994

Policy Initiatives.   The Cypriot legislature is reviewing a bill to
allow "controlled delivery" of narcotics for drug-trafficking law
enforcement investigations and is expected to vote on it in 1995.
Accomplishments.   In December, the GOC's Central Bank issued regulations
extending bank compliance officers' responsibilities to include
anti-money laundering procedures.  In September, the Cyprus police force
organized a task force of financial investigators and Central Bank
officials to identify fraudulent financial activtities.

The GOC also signed separate bilateral counternarcotics cooperative
agreements with the governments of Egypt and the United Kingdom in 1994.

Agreements and Treaties.  The GOC ratified the 1988 UN Convention in 1990
and is generally meeting the Convention's goals and objectives.  The GOC
is also party to the 1961 Single Convention, the 1972 Protocol, and the
1971 Convention of Psychotropic Substances.  Cyprus cooperates closely
with the USG under the 1987 USG-GOC Customs Mutual Assistance Agreement.

Law Enforcement Efforts.  Narcotics laws are enforced strictly in Cyprus.
Cyprus police and customs authorities maintain excellent relations with
United States and other foreign government officials.  Domestic law
enforcement cooperation is limited by the de facto division of northern
Turkish speaking Cyprus, an area beyond the GOC's control.  Authorities
in the government controlled areas have no direct working relations with
enforcement authorities in the "Turkish Republic of Northern Cyprus" or
with Turkey.  Turkish Cypriots have their own law enforcement
organization, responsible for the investigation of all narcotics related
matters and have carried out seizures and other enforcement activiites in
the northern part of Cyprus.

GOC officials are concerned about rising drug-related crime.  At the end
of September 1994, Cyprus police arrested 166 people on drug-related
charges, compared with 123 in all of 1993.  Cypriot sentencing guidelines
call for a maximum prison term of one year for drug users under 25 years
of age with no police record.  Sentences for drug traffickers range from
four years to life, depending on the substances involved and the
offender's criminal record.  

In 1994, GOC authorities seized 5 kilograms of cannabis (compared to 15
kilograms on 1993), 2.6 kilograms of heroin (compared to 1 kilogram in
1993) and .04 kilograms of cocaine (compared to 4.9 kilograms in 1993).

Corruption.  Corruption among public officials is not a problem in
Cyprus.  There are no recorded cases of senior government officials
involved in narcotics trafficking-related activities.

Cultivation/Production.  GOC officials believe small amounts of marijuana
are cultivated for personal use.  The USG is not aware of any other
production or cultivation of drugs in Cyprus.

Drug Flow/Transit.  The Cyprus police believe illicit drugs, particularly
heroin, transit northern Cyprus from Turkey to other parts of Europe.
Cyprus is also a transit point for cocaine transported by commercial air
from Brazil to Cyprus and destined to the Middle East and countries of
the former Soviet Union. 
Demand Reduction Programs.  Recent increases in drug use prompted the GOC
to focus more attention on demand reduction efforts and education.  In
1994, the GOC increased the number of drug abuse consultative centers in

IV.  USG Policy Initiatives and Programs

In June 1994, the Drug Enforcement Administration (DEA), in cooperation
with INL, held two seminars on money laundering for 70 bank officials.
DEA also provided money laundering training to Cyprus police  officials.
In September, DEA, in conjunction with INL, held a drug enforcement
seminar for officials of the Cyprus police and customs service.

The GOC and USG are negotiating an updated extradition treaty that would
supersede the existing one.  A memorandum of understanding on the treaty
was initialed but the treaty has not yet been concluded.

The Road Ahead.  The USG looks forward to continued good law enforcement
cooperation with the GOC.  For the coming year the USG will encourage
further efforts to deter money laundering activities in Cyprus, and will
continue negotiations on an updated extradition treaty.