Cyprus rejects private money laundering probe

Cyprus said on Wednesday that it opposes a Eurogroup proposal for a private firm to audit the island's compliance with measures aimed at tackling money-laundering.

"The government does not accept this process of investigation by a private firm on the issue of money-laundering," said government spokesman Stefanos Stefanou.

"We have clarified this position with arguments and given (them) in writing to the Eurogroup," he told reporters.

Stefanou said Cyprus was being held to ransom by "certain circles" in the European Union to bow to pressure on the issue.

This, he said, was despite the fact it was willing to allow international organisations like the Council of Europe's Moneyval or the International Monetary Fund to check its financial institutions.

The spokesman said the insistence of using a private firm by fellow eurozone members was an act of "bad faith" and "malice" towards Cyprus. He also argued it was in breach of Europe's own guidelines.

"This move at the expense of Cyprus is unacceptable and invalidates the principle of solidarity that should guide Europe."

The eurozone aims to agree a bailout accord for struggling Cyprus in March but serious concerns over its banks and suspicions of money-laundering have to be resolved first, the head of the Eurogroup's finance ministers said on Monday.

Dutch Finance Minister Jeroen Dijsselbloem, chairing his first meeting of the 17-nation eurozone, said it was agreed an independent assessment conducted by a private sector firm was required.

Dijsselbloem said the troika of international lenders and Cyprus were requested to agree on the terms of reference for such an assessment within a week.

Cyprus asked in June for a bailout worth some 17 billion euros ($23 billion), equal to its annual economic output.

But progress has been slow given concerns -- mainly from Germany -- over its banks and allegations of money-laundering due to fears of a presence of Russian criminal elements in the country.

Nicosia says it has been checked by international organisations and given a clean bill of health while its compliance with financial crime measures is better than most of its European neighbours.