Country Report on Terrorism 2016 - Chapter 2 - Cyprus

Overview: The Republic of Cyprus collaborated closely with the United States, the European Union (EU), and other countries – bilaterally and multilaterally – in international counterterrorism efforts in 2016. Cyprus’ counterterrorism partnership with the United States included participation in a Department of State-funded Department of Justice regional program focused on countering Hizballah. The program strengthened the government’s understanding of Hizballah and stressed the importance of interagency cooperation in countering all types of terrorism.

Since 1974, Cyprus has been divided de facto into the Republic of Cyprus government‑controlled area, composed of the southern two-thirds of the island, and the northern third not under the effective control of the Republic of Cyprus, which is administered by the Turkish Cypriots. In 1983, the Turkish Cypriots declared the northern part to be the independent “Turkish Republic of Northern Cyprus” (“TRNC”). The United States does not recognize the “TRNC,” nor does any country other than Turkey. The UN Peacekeeping Force in Cyprus (UNFICYP) patrols the Buffer Zone, also called “the Green Line,” which separates the two sides, is largely open to civilian traffic, and remains a significant route for the illicit transit of people, narcotics, and other contraband.

The division of the island has impeded counterterrorism cooperation between the two communities and between the Republics of Cyprus and Turkey, which do not maintain diplomatic relations. Given the lack of international recognition, the Turkish Cypriots do not have the legal and institutional framework necessary to counter the financing of terrorism effectively. Within these current limitations, Turkish Cypriots have cooperated in pursuing specific counterterrorism objectives.

Cyprus is a partner in the Global Coalition to Defeat ISIS and regularly participates in the Coalition’s Working Groups on Foreign Terrorist Fighters and Counter-ISIS Finance Group.

Legislation, Law Enforcement, and Border Security: The Republic of Cyprus enacted a National Law on Combating Terrorism in 2010 that incorporates EU Council Framework Decisions. Cypriot authorities continued to develop capabilities under the supervision of the National Counterterrorism Coordinator and a specialized counterterrorism squad in the Cypriot National Police’s (CNP) Emergency Response Unit.

In response to multiple terrorist attacks in Europe, Cyprus enhanced its security cooperation and law enforcement measures. These activities included increased patrols around critical infrastructure and soft targets including popular tourist resorts, cultural sites, and diplomatic facilities. They have also increased security measures and surveillance at border crossing points and along the “Green Line” and Cypriot coast. Cyprus has strengthened passport control at airports and seaports through improved information exchange with Europol and INTERPOL regarding lost and stolen passports and enhanced training for border security officers to identify potential foreign terrorist fighters.

Cyprus currently is reviewing its existing legislation to address the requirements set out in UN Security Council resolution (UNSCR) 2178. Cyprus is also preparing to implement the 2016 EU Directive on the use of Passenger Name Records.

Countering the Financing of Terrorism: The Republic of Cyprus is a member of the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, a Financial Action Task Force-style regional body. Cyprus’s financial intelligence unit, the Unit for Combating Money Laundering (MOKAS), is a member of the Egmont Group of Financial Intelligence Units.

In April 2015, MOKAS started using “goAML,” a sophisticated IT system, designed to meet data collection, management, analytical, workflow, and statistical needs of FIUs. This new system enables supervised entities to submit suspicious transaction reports to MOKAS electronically, under the highest security standards. MOKAS has already reported a 25 percent increase in the number of reports filed since the inception of this system, crediting it with simplifying the submission process.

In 2016, Cypriot authorities continued conducting a national risk assessment on money laundering and terrorist financing, covering the entire anti-money laundering/countering the financing of terrorism (AML/CFT) system, including charities. This document will build on a set of AML/CFT reforms, focusing on the financial sector transparency that Cyprus implemented in 2013-2016, in accordance with its IMF assistance program.

Cyprus has implemented the UN Security Council ISIL (Da’esh) and al-Qa’ida sanctions regime and informally tracked individuals and entities listed under U.S. executive orders (E.O.), including E.O. 13224. The Ministry of Foreign Affairs circulates updates of UN and EU sanctions lists to relevant authorities as well as the Cyprus Bar Association and the Institute of Certified Public Accountants of Cyprus. Cyprus does not have legal powers in place to apply targeted financial sanctions pursuant to UNSCR 1373, however.

Cyprus enacted legislation in 2016 to designate national competent authorities for implementing the EU and UN sanctions regimes and criminalizing infringements (“The Implementation of the Provisions of UNSCRs or Decisions (Sanctions) and Decisions and Regulations of the Council of the European Union (Restrictive Measures) Law of 2016, L.58(I)/2016”). This law also enables the supervisory authorities of the financial and non-financial sector to issue directives to their regulated entities and take administrative measures in case of non-compliance. Cyprus did not identify or freeze any assets pursuant to relevant UNSCRs in 2016.

The Central Bank of Cyprus is the supervisory authority for the banking sector, including cooperative societies, electronic money institutions, and payment institutions. Cyprus does not have a significant unregulated informal banking and money transfer system. Predominantly due to low capacity for supervision of financial institutions and company formation, Cyprus remains a major hub for shell company activity.

For further information on money laundering and financial crimes, see the 2017 International Narcotics Control Strategy Report (INCSR), Volume II, Money Laundering and Financial Crimes: http://www.state.gov/j/inl/rls/nrcrpt/index.htm.

Countering Violent Extremism: Cyprus has established a network of first-line officers in the CNP, Social Welfare Services, and Ministries of Justice, Education, and Interior, to exchange information and best practices on identifying radicalized behavior. The government has also established relationships with civil society organizations and municipal authorities to prevent radicalization to violence. Cyprus has continued its participation in the European Commission’s Radicalization Awareness Network (RAN), and prison staff participates in the RAN Prison Network of the EU.

International and Regional Cooperation: Members of the CNP’s Counterterrorism Office participate in the Working Group on Terrorism at the Council of the EU. Cyprus regularly participates in the Police Working Group on Terrorism, the “Dumas” Working Group, the European Expert Network on Terrorism, and the Europol European Counter Terrorism Center, as well as other meetings convened under Europol and INTERPOL. Cyprus has contributed to the Council of Europe’s efforts to establish and adopt the Additional Protocol to the Council of Europe Convention on Combating Terrorism, which addresses foreign terrorist fighters within the framework of UNSCR 2178 (2014).