A proposal to exempt casinos from the €10,000 cash transaction limit was presented to the Parliamentary Committee on Institutions on Wednesday, sparking concerns about its potential impact on financial transparency and anti-money laundering efforts. Critics warn that such an exemption could undermine Cyprus’s economic reforms, damage its international reputation, and create loopholes in combating illicit financial activities.

The proposal was submitted by the parliamentary groups of DIKO and DIPA-Cooperation, excluding MP Michalis Yiakoumi.

During the discussion, the management of Cyprus’s casino industry argued that 94% of transactions within casinos are conducted in cash. They, along with the MPs supporting the proposal, cited concerns over unfair competition with other European casinos where similar exemptions exist.

The proposal follows recent legislation restricting cash transactions, aligned with EU regulations set for full implementation by 2027. This legislation was introduced by MP Demetris Demetriou, Chair of the Institutions Committee, who pointed out that €120 million in cash had passed through Cyprus customs in the last three years, with no clear trace of its final destination.

Despite these concerns, the Ministry of Finance, the Deputy Ministry of Tourism, the Tax Department, and the Cyprus Gaming and Casino Supervision Authority expressed support for the exemption. However, questions remain over whether the risks associated with large-scale cash transactions in casinos were adequately assessed in such a short timeframe—especially as Cyprus remains under international scrutiny for financial practices.

The Unit for Combating Money Laundering (MOKAS) reported 101 suspicious transaction reports related to casinos in 2023 and 81 in 2024, 25% of which involved cash transactions. Some cases have already been referred to law enforcement, but further details remain undisclosed.

MOKAS emphasized that cash transactions pose well-documented risks and that the recent cash transaction restrictions have made its work easier in combating money laundering.

Moreover, Pantelis Christofides, President of the Cyprus Bar Association's Committee on Anti-Money Laundering, raised concerns during the session about unequal treatment under the law regarding cash usage restrictions. He pointed out that if an exemption were granted to casinos but not to other financial entities operating in the Republic, it would create legal inconsistencies.

Mr. Christofides explained that Article 28 of the Constitution stipulates that everyone is equal before the law. He also noted that, beyond casinos, other regulated professions exist (mentioning real estate developers among them). He added that if one sector were treated differently, others facing legal action for violations could reasonably argue that their constitutional rights had been breached.

The Cyprus Association of Certified Accountants echoed Mr. Christofides' concerns. A representative of the association informed the committee that many EU countries also enforce cash usage restrictions and suggested that casinos should examine how these restrictions are implemented elsewhere.

The Central Bank also voiced reservations about amending the legislation, stressing that it would be unacceptable to have no cash usage limit for casinos. Similarly, the Cyprus Securities and Exchange Commission and the Bankers’ Association emphasized that the current law is already aligned with European regulations, which are set for full implementation.

The Legal Service also shared these concerns, highlighting that for a financial entity to be granted a transitional period, it must be demonstrated that the principle of proportionality is not being upheld. This must be justified with evidence showing a negative impact from the law’s enforcement.

Casino representatives revealed that 40,000 transactions totaling €32 million occur monthly, with their top clientele coming from Arab countries and Israel. They assured MPs that rigorous source-of-funds verification is conducted, including tax records and salary documentation.

The Deputy Ministry of Tourism also expressed concerns that strict cash limits could drive customers to casinos in the occupied areas, further impacting the industry’s competitiveness.

DIPA MP Marinos Mousiouttas, speaking on behalf of the proponents of the proposal to exempt casinos, stated that the aim is not to change the spirit of the law. "The casino is a unique business in the Republic of Cyprus, and with this proposal, we will facilitate the continuation of this profitable investment," he noted, also citing the controls in place to combat money laundering.

DIKO MP Zacharias Koulias argued that casinos in other European countries operate under similar conditions, and to ensure fair competition, Cyprus should temporarily suspend the enforcement of cash restrictions.

However, DISY MP Demetris Demetriou made it clear that the proposal would not be advanced without strict provisions to verify all cash inflows into casinos against declared amounts at customs.

AKEL MP Andreas Pasiourtides strongly opposed the exemption, emphasizing that casinos are classified as high-risk entities by the EU in terms of money laundering risks. Given that 94% of casino transactions involve cash, he questioned why they should be exempt from a law designed to prevent illicit financial activities.