The Cyprus Mail reported the Liberty Reserve indictment (see previous 29th May blog post below) with official reactions on June 1st 2013.
Eva Rossidou-Papakyriacou, who heads up the Cyprus anti-money-laundering unit, MOKAS, is reported as saying that the unit has been working closely with US authorities since 2012 on the Liberty Reserve case.
She says this had been taking place, “Not only after their request but also after our banks, some at least, spotted some suspicious transactions and reported them to the unit [ie MOKAS]."[See also her comments in Charles Forelle's updated WSJ blog entry.]
Government Spokesman, Christos Stylianides, commended the head of MOKAS for her ‘very important and decisive’ response to the Liberty Reserve case.
Hellenic Bank told the Cyprus Mail that it had spotted two suspicious accounts and reported the matter to MOKAS in January 2012.
In a press release of 31st May 2013 Hellenic Bank stated,
Hellenic Bank detected early on accounts referred to in the U.S. prosecution document through its systems and due diligence procedures, and acting proactively, informed ... [MOKAS] in January 2012. Since then it is in constant communication and cooperation with M.O.K.A.S. which in turn is in cooperation with the U.S. authorities.
We would also like to state that the amounts transacted through the said accounts are miniscule in relation to the amounts mentioned in the international press.
It is alleged that $6bn (€4.6bn) passed through Liberty Reserve between 2006 and 2013. The Special Agent Deposition in the indictment alleges that six (part of the so-called 'Cypriot Target Accounts') of the 17 Hellenic bank accounts named in the indictment received about €1.4m as transfers from the Australian bank, Westpac as part of Liberty Reserve's operations.
It is unclear from the deposition if this was just for the period June 12, 2012 to 1 May 2013 or for the entire period of Liberty Reserve's operations - see Points 30 and 31 in Exhibit B U.S. v. Liberty Reserve, et al. Redacted AUSA Appln.)
The total amount that is alleged to have been sent by Liberty Reserve to its Westpac accounts in the period above was $37m.)
It is unclear from the Hellenic Bank press release above if the 'said accounts' that 'are miniscule in relation to the amounts mentioned in the international press' are the Target Accounts referred to in Exhibit B U.S. v. Liberty Reserve, et al. Redacted AUSA Appln.
It is unclear at present what funds might have been transferred to the 9 Hellenic accounts that were covered by the two seizure warrants in March 2012 and February 2013. The March 21st 2012 seizure warrant targetted just one account - Ediago Holding Limited (see Exhibit C U.S. v. Liberty Reserve, et al. Redacted AUSA Appln). This was the only warrant issued at this time for an account in Cyprus. The only other accounts targetted in Cyprus with a seizure warrant were a further eight Hellenic accounts in February 2013.
At the same time that the Ediago Holding Limited account seizure warrant was issued another was issued that covered four Liberty Reserve accounts at the Banco Crédito Agrícola de Cartago (BCAC) in Costa Rica (see Exhibit E U.S. v. Liberty Reserve, et al. Redacted AUSA Appln).
A Costa Rican web-based news service, CRHoy asserts that $12.5m was transferred between 30th November and 6th December 2011 from one of the Liberty Reserve BCAC accounts to the Ediago Holding Company account at Hellenic Bank before it was again transferred on to a Russian account. This alleged connection and transfer is based on access to a Costa Rican judicial search warrant (La orden de allanamiento bajo el expediente judicial 13000066-1035-PE).
If this were the case the alleged amount of money going through Hellenic Bank accounts would rise by €9.6m ($12.5m) to €11m.
For more on the different amounts of money that are alleged to have been transferred into the 'Cypriot Target Accounts' see below.
The Cyprus Development Bank (CDB) told the Cyprus Mail that, “The bank applies the necessary measures to prevent and stamp out illicit financial transactions systematically and consistently. Towards this end, it cooperates with MOKAS whenever necessary.”
One CDB account held in the name of 'Unida Limited' is listed in the Forfeiture list of the indictment. It is one of the accounts targetted for restraint rather than seizure. It is alleged that, 'the account received approximately 438,000 Euros from the Liberty Reserve account in Russia that had previously received more than 10 million from Liberty Reserve's account in Cyprus (see Point 32a Exhibit B U.S. v. Liberty Reserve, et al. Redacted AUSA Appln.)
(It is unclear what is meant by the 'Liberty Reserve account in Cyprus' in the indictment as there is no account with the Liberty Reserve name in a Cyprus bank listed in the
Ms Rossidou-Papakyriacou of MOKAS also told the Cyprus Mail that the Cypriot authorities had done a lot in the Liberty Reserve case and had received thank you letters from the US. 'She also denied that there were 22 accounts in total that were linked to Cyprus.'
It is unclear from the Cyprus Mail article above how the head of MOKAS arrived at this conclusion as 22 bank accounts in banks in Cyprus are listed in the indictment. Not all of the banks are necessarily 'Cypriot' banks: some may be branch operations registered in other countries, for example or subsidiaries. But the accounts were in banks in Cyprus.]
From the Cyprus Mail article above it appears that two of the twenty two accounts in Cyprus listed in the indictment were spotted by the banks involved. (Ms Rossidou-Papakyriacou does says that 'banks, [plural] some at least, spotted some suspicious transactions' in the Cyprus Mail piece above so there may be other notifications that have not been revealed to the press.) These were two accounts at Hellenic Bank. The indictment lists 17 Hellenic Bank accounts in its Forfeiture Allegation.
The 17 Hellenic Bank accounts listed in the indictment comprise 12 company accounts and 5 accounts held in the names of different Defendants in the indictment.
The U.S. Secret Service's Special Agent's deposition (U.S. v. Liberty Reserve, et al. Redacted AUSA Appln Exhibit B) in the Liberty Reserve indictment alleges that $18m passed through the eleven so-called 'Cypriot Target Accounts' (of a total of a 15 Target Accounts) listed in Exhibit B.
The Target Accounts in Cyprus that allegedly received the biggest transfers of Liberty Reserve funds were National Bank of Greece (Cyprus) and Eurobank EFG Cyprus (more than $14m between them), a different Eurobank EFG account ($2.3m) and two Hellenic Bank accounts ($1.4m between them).
For Eurobank's response (in Greek) see here. It said that the two accounts named in the indictment were closed down by the bank in the first half of 2012 and that the amount of money that passed through the accounts was 'less than 0.1%" compared to the total amounts handled [presumably the $6bn (€4.6bn) figure in the indictment for Liberty Preserve's 2006-13 operations] according to Media' (Machine translation).
The US indictment of May 2013 seeks to both restrain and subject the two EFG accounts in the document to forfeiture (see Point 31 g. and h. in Exhibit B U.S. v. Liberty Reserve, et al. Redacted AUSA Appln.)
Nine Hellenic bank accounts are named in the two US District Court (NY South District) Warrants to seize property subject to forfeiture of property issued on March 21 2102 (one account) and 5th February 2013 (8 accounts) (see Exhibits C and H in U.S. v. Liberty Reserve, et al. Redacted AUSA Appln).
It is possible that the preponderance of bank accounts at Hellenic Bank in the indictment results from the Bank's pro-active co-operation with MOKAS and the US authorities.
NB:None of the banks named in the indictment are accused of any wrongdoing. And the charges contained in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.
a) In August 2012 Bloomberg reported that the Archbishopric of Cyprus increased its stake in Hellenic Bank to 16.4 percent from 13.7 percent and was the largest investor in the bank. The article noted that 'other church institutions have a 7 percent stake in Hellenic, according to a May 30 presentation by the bank'.
b) For more on the Costa Rican investigation see this very detailed article in the Tico Times which notes,
Costa Rican police searched eight sites on Friday, including the offices of companies managed by Budovsky. Companies searched were Silverhand Solutions & Technology S.A. (Santa Ana), Worldwide E-Commerce Business S.A., or WEBSA (Escazú), Grupo Lulu Limitada (Escazú), Triton Group A & A, S.A. (Escazú) and ... . Police also raided two private homes in Santa Ana and one in Heredia, reportedly belonging to Budovsky and associates.
“The raided companies are, in some manner, related to Liberty Reserve. Costa Rican authorities seized documental proof and digital information that will be turned over to the U.S., via international penal assistance,” the Prosecutor’s Office statement said.
Costa Rican nationals named in the indictment cannot be extradited because there is no extradition treaty between Costa Rica and the USA (except in cases of drug trafficking and terrorism).
(See previous 29th May blog post for further details).