The Cyprus Securities and Exchange Commission (CySEC) released a statement on Monday saying that it is gathering relevant data before deciding whether or not it will further investigate allegations about brokers helping to launder money for Latin American drug cartels.
Paphos mayor Phedonas Phedonos made the claims in a social media post last week, saying that brokers have become a conduit for drug money to enter the financial system ‘legitimately’.
“Many foreign exchange companies based in Cyprus, through a labyrinth network of companies they create in Latin America, participate in the laundering of dirty money originating from the drug cartels of Mexico and other Latin American countries,” he said.
He then asked why brokers are setting up subsidiaries on the continent and why Cypriot authorities are allowing the money to flow back to the country.
Without knowing all the details, Phedonos’s claims actually seem somewhat misplaced. Most brokers continue to expand in places like Latin America because they can still offer high leverage there and it is a less expensive and competitive market than Europe.
CySEC weighing up the data
CySEC’s response was a terse one and mainly reiterated the nature of the foreign exchange market and what their responsibilities are in overseeing locally regulated brokers.
However, they did suggest that they are looking into the claims and will decide whether or not to pursue an investigation into them.
“It is within the scope of this responsibility that CySEC is taking practical steps to gather all available data and information from relevant bodies before making a decision on whether or not further investigation into the claim is required,” the Cypriot regulator said.
“CySEC fully collaborates and exchanges information with domestic, European and international bodies including ESMA, EBA, AMLA, MoneyVal, FATF and National Competent Authorities.”
