Cyprus is on the brink of referral to the European Court of Justice (ECJ) for not fully transposing EU rules aimed at combating fraud against its budget, particularly in defining and assigning responsibility to legal entities and establishing jurisdiction over money laundering offenses. This comes from the European Commission's infringement decisions package for April, published on Wednesday.

The European Commission has also initiated infringement proceedings in a separate case where Cyprus has not fully authorized its national authority with the necessary powers and competencies to enforce the Digital Services Act.

Infringement proceedings relate to violations of EU law identified by the Commission at the member state level, stemming from non-compliance, incorrect implementation, or incomplete transposition of EU legislation into national law. If a member state fails to comply, the Commission can refer it to the ECJ.

In this package of decisions, the Commission also closed 76 cases where issues with member states were resolved without requiring further proceedings. Of these, five cases pertain to Cyprus, covering regulations on employee secondment, corporate law digitization, professional qualification for engineers and architects, and internal transport of hazardous goods.

The Commission decided to send a reasoned opinion to Cyprus (INFR(2021)2265) and Greece, one step before referral to the ECJ, because they did not correctly transpose the directive combating fraud against the EU budget through criminal law (PIF directive).

These rules harmonize definitions, sanctions, and statute of limitations for criminal offenses that affect EU financial interests, forming the basis for the work of the European Public Prosecutor's Office (EPPO).

The Commission first sent a warning letter to Greece in December 2021 and to Cyprus in February 2022. After analyzing the responses, the Commission determined that Cyprus had not fully transposed provisions related to the definition and responsibilities of legal entities and the jurisdiction over money laundering offenses, as required by the directive.

After issuing the reasoned opinion, Cyprus and Greece have two months to respond or address the noted deficiencies. If they fail to do so, the Commission could refer the cases to the ECJ.