Cyprus should fully implement anti-money laundering norms: IMF

International Monetary Fund has asked Cyprus to "fully implement" anti-money laundering framework at a time when India has put investments coming from the island nation under tax lens.
Reference to the anti-money laundering framework is part of suggestions made by the multilateral lender after its Executive Board completed the fourth review of Cyprus' performance under an economic programme supported by 1 billion euro worth arrangement under the Extended Fund Facility (EFF).
"The authorities also need to intensify supervisory monitoring of banks' loan restructuring efforts, further strengthen overall supervision and regulation, and fully implement the anti-money laundering framework," IMF Managing Director Christine Lagarde said about the island nation.

Noting that challenges and risks remain, full and timely policy implementation would be critical to the programme's continued success, Lagarde said in a statement released on Monday.
Late last year, the then Indian government had put investments coming from Cyprus under tax lens, a move which the island nation had said was creating immense obstacles for investment activities between them.
The move was a part of efforts to curb possible tax evasion by entities through Cyprus.

Discussions have taken place between the two sides on the issues while Cyprus expects to sort out the matter by closely cooperating with the new Indian government.

Cyprus is one of the top sources of foreign direct investments for India. In 2013-14, India received FDI worth USD 557 million from the island nation.
In November 2013, India had classified Cyprus as a notified jurisdictional area since the island nation has not been providing information requested by tax authorities under exchange of information provisions of the double taxation avoidance pact.
With the notification, all payments made to Cyprus would attract 30 per cent withholding tax and Indian entities receiving money from there will be required to disclose the source of funds. The transactions may also be covered by transfer pricing regulations.

India and Cyprus had entered into an agreement for avoidance of double taxation of income and prevention of fiscal evasion which is in force since December 1994.
In the context of the review, Lagarde, who is also the IMF Executive Board's Chair, said Cypriot authorities recapitalised and restructured the financial sector, removed domestic payment restrictions, implemented an ambitious fiscal consolidation, and initiated important structural reforms.