Paphos Mayor Phedonas Phedonos has made strong allegations that Cyprus has become part of an international money laundering network involving Latin American drug cartels. Speaking on social media, the mayor claimed that some Forex firms based in Cyprus are being used to launder drug money through complex shell company networks in Latin America, KNEWS reported.

Mayor Demands Action on Forex Funds

He warned that Cyprus is no longer only a transit point for drugs but is now deeply involved in laundering proceeds from organized crime. The mayor called on regulators to investigate the flow of funds and questioned why financial authorities appear to allow large sums to move unchecked.

In response, the Cyprus Securities and Exchange Commission (CySEC) issued a statement underscoring its regulatory role. A CySEC spokesperson said:

“The foreign exchange (forex) market is a decentralised network of banks, brokers and other financial institutions that facilitate currency transactions. A market that is the biggest and most liquid in the world where financial groups hold multiple licenses in different jurisdictions.”

“Whilst there is no central oversight body for the entire forex market, CySEC’s responsibility as the national regulatory body is to supervise domestic forex trading investment firms in Cyprus to ensure that they are in strict compliance, among others, with the EU Markets in Financial Instruments Directive (MiFID II) and the latest EU AML Directives and Regulations. There are severe penalties and enforcement actions for non-compliance.”

Cyprus Faces Scrutiny Over Financial Oversight

CySEC confirmed it is gathering information from domestic and international bodies before deciding whether to open an investigation related to the mayor’s claims. The regulator reaffirmed its commitment to protecting investors and maintaining the integrity of Cyprus’s financial markets, highlighting ongoing cooperation with European and global agencies.

The mayor’s allegations have stirred concerns about potential weaknesses in oversight and the possibility of deeper connections between organized crime and Cyprus’s financial sector. Authorities are now under pressure to demonstrate transparency and take decisive action if necessary.