Mediterranean: Cyprus Island’s Risky Bet: Casinos and ‘Dirty Money’

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Vines and lemons disappeared from under the bulldozers. A few kilometers from the sea, in the south of Cyprus, hundreds of workers are busy until the City of Dreams comes off the ground, a luxury hotel and casino destined to become “the largest in Europe”.

The luxury City of Dreams Hotel and Casino is still under construction and is set to become “the largest in Europe”.

France Press agency

A flawless white shirt and slender cowboy silhouette, American Grant Johnson was sent to Limassol by Melco Group in Hong Kong for this mega project. Sixteen floors, three swimming pools, nine restaurants and cafes, an adventure park and an amphitheater: Milko dreamed of establishing it for the first time in the European Union (EU).

Its 7,500-square-meter casino should become “the largest in Europe” with “a thousand slot machines and a hundred blackjack tables,” as well as a VIP room for the big players, Johnson says. The president weighs his every word. On a sheet of paper near him, the answers are arranged by the press relations officer standing next to him, not hesitating to interrupt him.

The arrival of the Mediterranean city of dreams, the first major player to set up shop in the south, could create new rivalries between the two parts of Cyprus – an island divided since the Turkish invasion in 1974 following the Athens-led coup. intended to be attached by Greece.

With its 34 casinos, the Turkish Republic of Northern Cyprus (RTCN, recognized by Ankara only) has made casino tourism its specialty and derives significant financial rewards from it. However, the south hopes to make City of Dreams a losing leader in developing the sector and attracting more and more tourists – at least 300,000 more, the government backing the project said in 2019.

At the moment, Milko had a series of disappointments. The Covid-19 pandemic delayed the opening of his casino hotel, which has now been postponed until the end of 2022. The war in Ukraine has shuffled the cards. The city of dreams was betting among other things on Russian tourists, for whom Cyprus is one of their favorite destinations. With Western sanctions against Moscow, Russians are denied direct flights to the small island on the Mediterranean. Despite these adventures, the City of Dreams, once opened, hopes to shed the near-total grip of Northern Cyprus on this region’s industry.

The island would then be placed “in a somewhat exceptional position” with capital “potentially flowing from Asia, but also from Turkey, Russia, Europe and the Middle East,” notes Marie Redon, a gambling researcher at the Sorbonne Paris Nord. . However, she asserts, “the more it came from different places, the more it circulated and the more possible arrangements could be made, such as money laundering.”

“sensitive subject”

Casinos in Cyprus “a sensitive topic”, m immediately apologized, and settled in a noisy cafe in Nicosia. Speaking a lot about it, “we run the risk of getting into trouble,” so the Greek Cypriots, who specialize in anti-money laundering, prefer not to be identified. The square-eyed, shaven-headed, forties banker sometimes casts anxious glances behind his shoulder.

“Until 2015, casinos were banned in Cyprus, and the Orthodox Church was against it,” he explains. Legalizing casinos was not easy. In addition to the Orthodox Church, which is very powerful in Cyprus, a part of the population opposed it, such as former President Demetris Christofias (2008-2013), who linked them to “corruption”.

“But after the serious economic crisis in 2013, large groups contacted the government and the latter decided the opportunity was very good,” Mr. “worrying,” he notes, “is that we are not prepared for what goes with casinos: the underground economy, money laundering. Nor We can close our eyes because we are members of the European Union, we risk paying a heavy price for it. We can’t do like the North.”

At the gates of Europe, an entire section of the economy of the TRNC is based on casinos. Their ban in Turkey in 1997 prompted large groups to establish themselves in northern Cyprus, where the industry has exploded. About $600 million was donated to the state in 2019 by casinos, while the government’s total budget for that year was $4.2 billion, according to The Business Year, a London-based financial media outlet.

In the TRNC, casinos have the choice between paying taxes proportional to their winnings or getting a fixed-rate license. Most people, thanks to this last option, can not disclose their income, which leaves “a great deal of uncertainty” in the sector, as the master sighs.

“It is clear that it is not the state that will check whether they are involved in massive money laundering,” regrets Turkish Cypriot activist Esra Aygin, who had to leave the TRNC for his own safety. “Our state is completely dependent on the casino business, our residents are like hostages.”

Sertaş Sunan, a specialist on economics and corruption in the TRNC, points to the example of Merit, the Turkish tyrant in this sector. “Merit has its own TV channel and even a newspaper. If you buy it, you get a free coffee or coke. The goal for them is not to make money through these media but to increase influence. It is very difficult for local politicians to say no to these giants,” he said. the Turks. Rather, it is more to impose the rules on them and monitor them.”

“Las vigas”

In Northern Cyprus, while the vast majority of casino owners are Turks, some were born here such as Erbil Arkin, the head of the powerful Arkin Group. “I am the pioneer of the casinos in the TRNC,” he said, tenderly caressing a statue of Auguste Rodin. The businessman, of great culture, owned about thirty works of the famous French sculptor and founded a university dedicated to art, near one of his casinos, in Kyrenia (North).

With undisguised pleasure, Arbel Arkin, a sixty-year-old jockey in a blue artist jacket, tells how in 1976, while studying art in London, he decided to have a drink with a friend to start his casino business in the TRNC. “The opportunities were enormous.”

He recalls that Northern Cyprus, which declared independence in 1983 while remaining under Ankara’s political and economic control, “then lived off the looting of homes” abandoned by Greek Cypriots. “Since (the casinos) existed, the economy has really changed. We have been a pariah country, we have become a tourist destination, he smiles.

“Casinos bring in a lot of money and are a great source of employment,” with 80,500 employees in this sector, mostly Turks and Turkish Cypriots. The TRNC, which does not conduct a census, is said to have a population of 276,000 people – to which should be added about 30,000 Turkish soldiers, according to experts.

It does not matter, then, whether the Turkish Cypriots call Mr. Arkin “holy or accursed”. The casinos “brought invaluable wealth to Northern Cyprus: tourists,” who come mainly from Turkey, Arab countries and Israel, he assured his boss. “We have put a pariah state on the map” of the world, he insists. “We have become the Las Vegas of the Middle East!”

“criminal” environment

In Kyrenia, Erbil Arkin does not blink when AFP raises the money laundering case. He answers: “I am not saying that money laundering does not exist in Northern Cyprus.” “But don’t look at the casinos (…) instead look at the banks.”

In another report, still in 2021, the US State Department warns that the “offshore banking sector poses a money-laundering risk” in the TRNC, and says it has “followed the path of the increasingly illicit activities originating in Istanbul.”

This same report adds that “the casinos and gaming industry (are) poorly regulated and prone to money laundering.” What Erbil Erkin wearily denies, while admitting that he does not verify the source of the money his clients play. “It is up to the police to do that,” he said. “It’s the same in the south.” And he is not mistaken, admits M., the Cypriot anti-money laundering expert. South Island is equally reluctant to control the origin of low bets in casinos. But the law regulates the institutions there more.

“Anti-money laundering (…) is a challenge and an ongoing process. The authorities are working on strong measures and minimizing risks,” the Cypriot Ministry of Finance said in a comment to AFP. He adds that “the assessment of Cyprus (on this topic), conducted by international organizations, shows A solid legislative framework.” As a rule, Mr. believes casinos are the “blessed bread of dirty money.”

“A Turkish smuggler walks into a casino and gets $100,000 from the heroin trade and receives tokens for it. He plays 20,000, loses part of it and then leaves without betting on the rest. He gives (his) chips to the casino, who gives him back his money with a voucher and that amount now.” Clean.” If we ask him, he can tell where it came from.

More than anywhere else, “the TRNC is the ideal environment for any criminal activity,” adds Georgios Stavri, Director of the Euro-Mediterranean Institute of Geopolitics in Nicosia. Exclue du système économique et politique international, notamment des organismes de surveillance contre le blanchiment d’argent, “Chypre-Nord n’a de comptes à rendre à personne (…) elle est l’arrière-cour pour les basses besognes de Turkey. It is very suitable for the whole region” in the Middle East.

The casino industry in North Cyprus is regularly experiencing violent unrest. In February, Turkish Cypriot property owner Halil Falyali was shot dead in Kyrenia, activist Esra Aygın recalls. Not far from the scene of the murder, the Colony Hotel continues to welcome players at times with ecstasy, sometimes with heavy eyes.

(France Press agency)

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