Cyprus has attracted over 25,000 offshore companies from all over the world, more than 2,500 of which are Russian. Cyprus' success as an international offshore center has made it vulnerable to international money laundering activities. Reports in the local and foreign press have suggested that the Russian mafia, among others, is using Cyprus for money laundering, although such claims are difficult to prove. The Central Bank of Cyprus believes its monitoring of monetary activities in general, and its concerted efforts to combat money laundering in recent years, have reduced money laundering activity, some of which would be drug related. However, it is possible that money launderers use the legitimate facilities of Cyprus to further their activities in other countries.
Cypriot law now carries 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. Cypriot law allows the confiscation of drug-related profits and allows the freezing of profits or a special investigation of the suspect's financial records, although no assets have ever been seized under this law.
Law Enforcement Efforts. Cyprus aggressively pursues drug seizures, arrests, and prosecutions for drug violations. Cyprus focuses on major traffickers when the opportunities are available, and readily supports the international community in its efforts. There have been no significant changes in the structure of the Cypriot law enforcement agencies. Cypriot police are generally effective in their law enforcement efforts; their techniques and capacity are restricted by a shortage of financial resources. International enforcement cooperation is limited somewhat by the political division of the island into the internationally recognized Republic of Cyprus in the south and the "Turkish Republic of Northern Cyprus," which is recognized only by Turkey, in the north. The Republic of Cyprus authorities have no relations with Turkish Cypriot enforcement authorities in the north. Turkish Cypriots have their own law enforcement organization, responsible for the investigation of all narcotics-related matters. These Turkish Cypriot authorities have shown a willingness to pursue narcotics traffickers and provide assistance when asked by foreign law enforcement authorities.
Corruption. Corruption in Cyprus is limited. There is no evidence of senior or other officials facilitating the production, processing or shipment of drugs.
Agreements and Treaties. A new extradition treaty between the US and Cyprus was signed in June, which will replace the 1931 US-UK Extradition Treaty currently in force for Cyprus. The ratification process is under way in both countries. Consultations on implementation and other mutual legal assistance matters will continue into 1997. There is no mutual legal assistance treaty (MLAT) in force between Cyprus and the US. Cyprus is a signatory to the 1988 UN Convention and the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime.
Cultivation/Production. The only known production is the limited, but increasing, cultivation of cannabis for individual use and, on a smaller scale, for resale. Cypriot authorities are working to eliminate such cultivation and abuse.
Drug Flow/Transit. No significant increase has been observed over the last year. Cyprus police believe their efforts in combating drug trafficking have mostly converted Cyprus from a drug transit point to a broker site for dealers. This change is likely also the result of improved conditions in Lebanon. Lebanese containerized freight now moves directly to third countries without transiting Cyprus. However, there were occasions in 1996 when kilograms of heroin seized in London were identified as transiting northern Cyprus from Turkey. In addition, Cyprus has become a transit point for cocaine transported by commercial air from Brazil via Cyprus to the Middle East and the former Soviet Union.
Domestic Programs. Drug abuse is relatively rare in Cyprus. Hashish is
the most commonly encountered drug, followed by heroin and cocaine, all of
which are available in most major cities. Users consist primarily of young
people and tourists. Recent increases in drug use have prompted the
government to actively promote demand reduction programs through the school
system and social organizations, occasionally with DEA-Nicosia participation.
Drug treatment is available.
Bilateral Cooperation. There are no bilateral agreements in place at this time.
The Road Ahead. The USG anticipates continued excellent cooperation from both the Cyprus police and Cyprus customs officials in our drug enforcement efforts. The USG expects to track closely government efforts to prevent the use of Cyprus' offshore sector as a money laundering center, and especially to track the influence/effect of Russian organized crime on Cyprus.