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Bank of Cyprus, Lloyds TSB Deny US Laundering Charge

Reuters
Tuesday, 16 Oct 2007 | 7:24 AM ET

Bank of Cyprus denied on Tuesday civil money laundering charges filed against it by US prosecutors, saying the case was legally and factually without merit.

Prosecutors in New York said on Monday they had filed civil money laundering charges against Lloyds TSB Bank and Bank of Cyprus, alleging the banks let hundreds of millions of dollars generated in a securities fraud case be laundered.

"The Bank maintains that it acted according to the law at all times, and is determined to vigorously contest all allegations of wrongdoing," Bank of Cyprus said in a statement released in Nicosia.

Lloyds TSB also denied the charges, saying there was no basis for the legal action.

US prosecutors allege the banks allowed Lycourgos Kyprianou, former chairman of AremisSoft, to launder money after his indictment by a US federal grand jury in 2002 on securities fraud and money laundering charges.

The US government is seeking civil penalties of at least $130 million from Lloyds TSB Bank, a unit of Lloyds TSB Group, and at least $162 million from Bank of Cyprus, the Mediterranean island's largest lender.

AremisSoft was a Nasdaq-listed company which filed for bankruptcy amid allegations from US authorities of insider trading on a massive scale.

Kyprianou, a Greek Cypriot, is in Cyprus. The island's legislation prevents extradition of its nationals to third jurisdictions, though it was not immediately clear if the US authorities had sought such a measure.

Bank of Cyprus said the Trustees of the AremisSoft Corporation Liquidating Trust had previously filed civil actions against it and other European banks.

The case was dismissed in August 2007 after a US federal judge upheld the bank's motion that the appropriate forum for any claims against the bank was the judicial system of Cyprus.

Bank of Cyprus did not engage in any conduct in the US and to date trustees have not initiated any legal proceedings against it though the Cypriot judiciary, the bank said.

The Cypriot bank said that subsequent to the Aug. 2007 ruling, US prosecutors and AremisSoft Trustees agreed to pursue civil action on charges very similar to those already dismissed by the federal judge.

"The Bank denies the allegations contained in both civil actions, and regards them as totally unfounded," Bank of Cyprus said.

"The Bank does not expect any significant financial or business consequences as a result of such actions because the civil claims are, in its view, factually and legally without merit."

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