The Dangerous Bet of Cyprus … Casinos and ‘Dirty Money’

Limassol (Cyprus) (AFP) – Vineyards and lemon trees have disappeared under the bulldozers … In the south of Cyprus, a few kilometers from the sea, hundreds of workers are building the City of Dreams, a luxury hotel and casino that is considered ” the largest in Europe “.

The American Grant Johnson, delegated to Limassol from the Hong Kong-based “Malco” group, which is building its first project in the European Union, oversees the implementation of the 16-storey complex, three swimming pools, nine restaurants, cafes, a park and an amphitheater.

Johnson claims the 7,500-square-foot casino will be “the largest in Europe” and will have “1,000 slot machines, a hundred blackjack tables” and a room for VIP players.

But “City of Dreams”, the first project of this size in the south of the island, could cause a new conflict between the two parts of Cyprus, of which the Turkish army has occupied the northern third since 1974 in response to a coup who tried to connect the island with Greece. Despite the failure of the coup, the Turks remained, and the northern part soon announced the establishment of the “Turkish Republic of Northern Cyprus”, recognized only by Ankara.

There are 34 casinos in the Turkish Republic of Northern Cyprus on which it depends for large tourist imports.

Nevertheless, the south of the island hopes to make the “City of Dreams” (the city of dreams) an attractive center to develop the sector and attract more tourists, at least an additional 300,000 people, according to the government who supported the project. in 2019.

But Melko has faced a series of setbacks.

The COVID-19 pandemic delayed the opening of the City of Dreams, which has been postponed until the end of 2022. The war in Ukraine also shook the cards.

This project bets especially on Russian tourists, for whom Cyprus is one of their favorite destinations. With Western sanctions against Moscow over its invasion of Ukraine, the Russians were denied direct flights to the small Mediterranean island.

Grant Johnson, oversees the project of the new “City of Dreams” casino in Cyprus owned by the “Malco” group of Hong Kong in Limassol in the south of Cyprus on November 10, 2021. Roy Issa AP

Despite these setbacks, the developers of the project hope to destabilize the Turkish Republic of Northern Cyprus’ control over the sector in the region as soon as it opens.

With this casino, Marie Rodon, a researcher specializing in gaming gambling facilitator at the Sorbonne University, says the island will be in a “fairly exceptional situation” with a “potential inflow of capital from Asia, Turkey, Russia, Europe and the Middle East “.

However, she stressed that “the more diversified resources (of funds), the greater their circulation, and it becomes possible to carry out more suspicious activities, such as money laundering.”

“sensitive topic”

A money laundering specialist from Cyprus, who preferred to remain anonymous while sitting in a busy cafe in Nicosia, said casinos in Cyprus were a “sensitive subject”. If there is a lot of talk about it, “we run the risk of getting into trouble.”

Arken Colony Casino in Kyrenia in
Arken Colony Casino in Kyrenia in the unilaterally marked ‘North Cyprus Narcotics’ on 16 March 2022. Roy Issa AP

“Until 2015, casinos in Cyprus were banned and the Orthodox Church opposed its establishment,” he explained.

Legalizing casinos has not been easy. In addition to the very influential Orthodox Church, a section of the population opposed it, including former president Demetris Christofias (2008-2013), who linked it to “corruption”.

“After the economic crisis in 2013, large groups contacted the government, which decided that the time was right” to open a casino, adds the man, who works in the banking sector.

But, he says, “we are concerned that we are not ready for what comes with casinos: the parallel economy and money laundering … We can not turn a blind eye because we are an EU Member State, and therefore “We run the risk of paying dearly for it. We can not do as the North does.”

Much of the economy of the Turkish Republic of Northern Cyprus is dependent on casinos. The ban on casinos in Turkey in 1997 prompted large groups to establish casinos in northern Cyprus, and the sector flourished.

And the casino sector entered the public treasury of the Northern Cyprus authorities, $ 600 million in 2019, while the total budget in that year was $ 4.2 billion, according to “The Business Year”, the specialized financial media- website in London.

In the Turkish Republic of Northern Cyprus, casinos have the choice between paying taxes in proportion to their profits or obtaining a fixed rate license. Thanks to the second option, most casino operators are unable to disclose their earnings, leaving a “big dark space” in the sector, according to the Greek Cypriot expert.

“It is clear that the state is not the one that will see if there is massive money laundering. Our state is completely dependent on business in casinos, our residents are hostages,” said Turkish Cypriot activist Esra Aygin, who was forced to the TRNC for her safety.

Sertaş Sunan, a specialist in economics and corruption at the TRNC, points to the model of the Turkish mega-group Merit.

He explains that “Merritt has his own TV channel and a newspaper. If you buy it, you get free coffee or a cool drink. His goal is not to make money from the two media offices, but to exert influence. . “

He continues, “It is very difficult for local politicians to say no to these giant Turkish groups, or to set rules and monitor them.”

“Las Vegas”

The vast majority of casino owners in Northern Cyprus are Turks, but some of them were born in Cyprus, such as the head of the influential group “Arkin”, Erbil Arkin.

Employees at Arkin Colony Casino in Kyrenia,
Employees at the Arkin Colony Casino in Kyrenia in the unilaterally proclaimed “Turkish Republic of Northern Cyprus”, on March 16, 2022. Roy Issa AP

“I’m the pioneer of casinos” in the TRNC, “Erkin says. At the same time, the businessman founded a university dedicated to the arts near one of his casinos in Kyrenia.

Arkin says he decided to enter the casino business in 1976 while studying art in London. “There were great opportunities,” he says.

He recalls that Northern Cyprus, which unilaterally declared its independence in 1983 while remaining under the political and economic control of Ankara, “lived off the looting of houses” left by the Greek Cypriots.

“Since (the casinos) settled there, the economy has changed. We were a pariah country, we became a tourist destination,” he added.

“Casinos generate a lot of money and are a huge source of employment,” he says, with 80,500 employees in the sector, most of whom are Turks and Turkish Cypriots.

The population of the “Turkish Republic of Northern Cyprus”, which does not hold a population census, is estimated by experts at 276,000, in addition to about 30,000 Turkish soldiers.

The casinos brought “an invaluable wealth to Northern Cyprus: the tourists” who come mainly from Turkey, Arab countries and Israel, according to Arkin, who says, “We are the Las Vegas of the Middle East!”

money laundering

At the Arken Group’s “Colony” casino in Kyrenia, customers of different ages can be seen playing with slot machines or at the playing card tables.

Suddenly, a young woman’s voice is heard shouting for joy over her winning 47,600 Turkish liras (3,040 euros). “Did you see? I won!”

Immediately a young man hurries her happiness. Babacan (31) is responsible for the “happiness” of customers. This young man was a former university professor of the French language, and he resigned his job to become a “hostess” at the casino and get a “better salary”.

Like the young S. a 34-year-old Cypriot-Turkish “hostess” was led by AFP in northern Nicosia. This young mother works at Merritt Casino because she “needs money”. “My role is to make the customer happy,” she says, on condition of anonymity. “If he loses, I encourage him to play again … and lose again.”

She tells how some of her co-workers supply drugs to clients, but also “female company”. But she refuses to do so “because God sees”.

A 2021 report by the US State Department showed that forced prostitution is common in northern Cyprus. “The 27 nightclubs in the TRNC are sex trafficking brothels,” the report said, pointing out that their managers are sometimes associated with members of the local government.

“criminal” environment

In Kyrenia, Erbil Arkin told AFP about money laundering, “I’m not saying that money laundering does not exist in Northern Cyprus. But do not look at the casinos (…) but look at the banks.”

In another report also published in 2021, the US State Department indicated that “the foreign banking sector poses a money laundering risk” in the “Turkish Republic of Northern Cyprus”, adding that it “follows increasing illegal activities from Istanbul. “

The same report shows that “casinos and the gambling industry are poorly regulated and vulnerable to money laundering.”

This is denied by Erbil Erkin, who at the same time acknowledges that he does not verify the source of the funds used by his clients. “It’s the police’s duty. It’s the same in the south,” he says.

And do not be mistaken about it. The Greek Cypriot citizen against money laundering says that the south of the island is also turning a blind eye to the source of the money used in its casinos. But the law in the south regulates institutions more.

“The fight against money laundering (…) is a challenge and an ongoing process. The authorities are working to take strong action and reduce risks,” the Cypriot finance minister told AFP. He adds that “the assessment of Cyprus (on this subject) drawn up by international organizations shows a solid legislative framework.”

“The ‘TRNC’ forms an ideal environment for any criminal activity,” said Yorgos Stavri, director of the Euro-Mediterranean Institute of Geopolitics in Nicosia.

As it is excluded from the international economic and political system, especially from anti-money laundering monitoring bodies, it “is not accountable to anyone (…) It is Turkey’s backyard of dirty work. It is very appropriate for the whole region. ” of the Middle East.

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