Greece

Sanctions

No

FATF AML Deficient List

No

Medium Risk

US Dept of State Money Laundering assessment 
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Failed States Index (Political Issues) (Average Score)

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ANTI-MONEY LAUNDERING

 

FATF Status

Greece is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Greece was undertaken in 2019. According to that Evaluation, Greece was deemed Compliant for 15 and Largely Compliant for 22 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 5 of the Effectiveness & Technical Compliance ratings.

 

US Department of State Money Laundering assessment (INCSR)

Greece was deemed a Jurisdiction of Primary Concern by the US Department of State 2017 International Narcotics Control Strategy Report (INCSR) but has not been included since. Key Findings from the last report are as follows: -

Greece is a regional financial center for the Balkans, as well as a bridge between Europe and the Middle East. Official corruption, the presence of organized crime, and a large informal economy make the country vulnerable to money laundering and terrorist financing. Greek law enforcement proceedings show that Greece is vulnerable to narcotics trafficking, trafficking in persons, illegal migration, prostitution, smuggling of cigarettes and other contraband, serious fraud or theft, illicit gaming activities, and large scale tax evasion.

Evidence suggests financial crimes – especially tax related – have increased in recent years. Criminal organizations, some with links to terrorist groups, are trying to use the Greek banking system to launder illicit proceeds. Criminally-derived proceeds are most commonly invested in real estate, the lottery, and the stock market. Criminal organizations from southeastern Europe, the Balkans, Georgia, and Russia are responsible for a large percentage of the crime that generates illicit funds. The imposition of capital controls in June 2015 has limited, but not halted, the widespread use of cash, which facilitates a gray economy as well as tax evasion, although the government is trying to crack down on both trends. The government is working to establish additional legal authorities to combat tax evasion. Due to the large informal economy, it is difficult to determine the value of goods smuggled into the country, including whether any of the smuggled goods are funded by narcotic or other illicit proceeds.

Greece has three free trade zones (FTZs), located in the Heraklion, Piraeus, and Thessaloniki port areas. Goods of foreign origin may be brought into the FTZs without payment of customs duties or other taxes and remain free of all duties and taxes if subsequently transshipped or re-exported. Similarly, documents pertaining to the receipt, storage, or transfer of goods within the FTZs are free from stamp taxes. The FTZs also may be used for repacking, sorting, and re-labeling operations. Assembly and manufacture of goods are carried out on a small scale in the Thessaloniki Free Zone. These FTZs may pose vulnerabilities for trade-based and other money laundering operations.

 

SANCTIONS

There are no international sanctions currently in force against this country.

 

BRIBERY & CORRUPTION

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           45

World Governance Indicator – Control of Corruption             52

Corruption severely affects Greece's business environment, completely distorting market competitiveness. A common form of corruption in Greece is known as 'fakelaki', translating to small envelopes and signifying bribes passed on to officials or other recipients to obtain some form of benefit. Greece’s Penal Code criminalises several forms of bribery, including passive and active bribery, abuse of office and money laundering, yet ineffective implementation of existing laws has exacerbated corruption in both the higher and lower echelons of government. The tax administration and public procurement are identified as the sectors most affected by corruption. Gifts, bribery and facilitation payments are widespread despite existing provisions that criminalise these acts. For further information - GAN Integrity Business Anti-Corruption Portal

 

ECONOMY

Greece has a capitalist economy with a public sector accounting for about 40% of GDP and with per capita GDP about two-thirds that of the leading euro-zone economies. Tourism provides 18% of GDP. Immigrants make up nearly one-fifth of the work force, mainly in agricultural and unskilled jobs. Greece is a major beneficiary of EU aid, equal to about 3.3% of annual GDP.

 

The Greek economy averaged growth of about 4% per year between 2003 and 2007, but the economy went into recession in 2009 as a result of the world financial crisis, tightening credit conditions, and Athens' failure to address a growing budget deficit. By 2013 the economy had contracted 26%, compared with the pre-crisis level of 2007. Greece met the EU's Growth and Stability Pact budget deficit criterion of no more than 3% of GDP in 2007-08, but violated it in 2009, with the deficit reaching 15% of GDP. Deteriorating public finances, inaccurate and misreported statistics, and consistent underperformance on reforms prompted major credit rating agencies to downgrade Greece's international debt rating in late 2009 and led the country into a financial crisis. Under intense pressure from the EU and international market participants, the government accepted a bailout program that called on Athens to cut government spending, decrease tax evasion, overhaul the civil-service, health-care, and pension systems, and reform the labor and product markets. Austerity measures reduced the deficit to 3% in 2015. Successive Greek governments, however, failed to push through many of the most unpopular reforms in the face of widespread political opposition, including from the country's powerful labor unions and the general public.

 

In April 2010, a leading credit agency assigned Greek debt its lowest possible credit rating, and in May 2010, the International Monetary Fund and euro-zone governments provided Greece emergency short- and medium-term loans worth $147 billion so that the country could make debt repayments to creditors. In exchange for the largest bailout ever assembled, the government announced combined spending cuts and tax increases totaling $40 billion over three years, on top of the tough austerity measures already taken. Greece, however, struggled to meet the targets set by the EU and the IMF, especially after Eurostat - the EU's statistical office - revised upward Greece's deficit and debt numbers for 2009 and 2010. European leaders and the IMF agreed in October 2011 to provide Athens a second bailout package of $169 billion. The second deal called for holders of Greek government bonds to write down a significant portion of their holdings to try to alleviate Greece’s government debt burden. However, Greek banks, saddled with a significant portion of sovereign debt, were adversely affected by the write down and $60 billion of the second bailout package was set aside to ensure the banking system was adequately capitalized. In exchange for the second bailout, Greece promised to step up efforts to increase tax collection, to reduce the size of government, and to rein in health spending. These austerity measures were designed to generate $7.8 billion in savings during 2013-15, but in fact prolonged Greece's economic recession and depressed tax revenues.

 

In 2014, the Greek economy began to turn the corner on the recession. Greece achieved three significant milestones: balancing the budget - not including debt repayments; issuing government debt in financial markets for the first time since 2010; and generating 0.7% GDP growth — the first economic expansion since 2007.

 

Despite the nascent recovery, widespread discontent with austerity measures helped propel the far-left Coalition of the Radical Left (SYRIZA) party into government in national legislative elections in January 2015. Between January and July 2015, frustrations between the SYRIZA-led government and Greece’s EU and IMF creditors over the implementation of bailout measures and disbursement of funds led the Greek government to run up significant arrears to suppliers and Greek banks to rely on emergency lending, and also called into question Greece’s future in the euro zone. To stave off a collapse of the banking system, Greece imposed capital controls in June 2015 shortly before rattling international financial markets by becoming the first developed nation to miss a loan payment to the IMF. Unable to reach an agreement with creditors, Prime Minister Alexios TSIPRAS held a nationwide referendum on 5 July on whether to accept the terms of Greece’s bailout, campaigning for the ultimately successful “no” vote. The TSIPRAS government subsequently agreed, however, to a new $96 billion bailout in order to avert Greece’s exit from the monetary bloc. On 20 August, Greece signed its third bailout which allowed it to cover significant debt payments to its EU and IMF creditors and ensure the banking sector retained access to emergency liquidity. The TSIPRAS government — which retook office on 20 September after calling new elections in late August — successfully secured disbursal of two delayed tranches of bailout funds. Despite the economic turmoil, Greek GDP did not contract as sharply as feared, with official source estimates of a -0.2% contraction in 2015, boosted in part by a strong tourist season.

 

Agriculture - products:

wheat, corn, barley, sugar beets, olives, tomatoes, wine, tobacco, potatoes; beef, dairy products

Industries:

tourism, food and tobacco processing, textiles, chemicals, metal products; mining, petroleum

Exports - commodities:

food and beverages, manufactured goods, petroleum products, chemicals, textiles

Exports - partners:

Italy 11.2%, Germany 7.3%, Turkey 6.6%, Cyprus 5.9%, Bulgaria 5.2%, US 4.8%, UK 4.2%, Egypt 4% (2015)

 

Imports - commodities:

machinery, transport equipment, fuels, chemicals

Imports - partners:

Germany 10.7%, Italy 8.4%, Russia 7.9%, Iraq 7%, China 5.9%, Netherlands 5.5%, France 4.5% (2015)

 

Investment Climate  -  US State Department

Greece continues to present a challenging climate for investment, both foreign and domestic. A leftist government took office in January 2015 parliamentary elections and won a renewed mandate in September 2015 elections for a four-year term. At the end of 2015, public debt reached a high of 182.7% of GDP. Despite a sharp economic contraction in the first half of 2015, the economy ended the year with a modest recession of -0.2% on the strength of record tourism receipts. Since 2008, Greek GDP has shrunk by 28%. Depressed demand, wage and pension cuts, and high unemployment have led to a considerable rise in the percentage of loans which are non-performing (NPLs), which has undermined the stability of the financial system.

 

Between January and July 2015, the government sought extensive renegotiation and easing of the terms of the country’s bailout agreement with the European Union (EU), European Central Bank (ECB), and International Monetary Fund (IMF). These efforts largely failed and the country’s finances worsened. In June and July 2015 the government missed sovereign loan repayments to the IMF and ECB. On June 29, 2015, the government imposed capital controls on financial institutions to restrict deposit flight and avert an imminent banking sector collapse. Economic activity slowed markedly.

 

In August 2015, to prevent national bankruptcy and the country’s potential exit from the Eurozone, Greece and its EU creditors signed a third €86 billion bailout agreement under the auspices of the European Stability Mechanism (ESM). The IMF did not participate in the initial European Union-led bailout agreement as its own financing and reform program agreement remained in force until March 2016. The government is presently unable to obtain financing through international bond markets because yields on Greek medium and long-term debt are prohibitively high as Greek sovereign bonds are not investment grade.

 

The new three-year ESM program agreement details fiscal and structural reform obligations Greece must meet in exchange for the disbursement of financing assistance to enable the government to meet its obligations. These reforms include enhanced and accelerated privatization of state assets, reduction in government bureaucracy, restructuring of the civil service, improvement to judicial procedures, enhanced tax collection, and new fiscal measures to close the social security system’s deficit. If implemented fully, the agreement envisions Greece reaching a 3.5% primary budget surplus in 2018, the year the program concludes.

 

In November 2015, as part of initial implementation of the August 2015 ESM agreement, Greece recapitalized its four major banks for a third time in five years. Large U.S. and foreign hedge funds participated in recapitalization of the principal Greek banks. The banking system remains unable to finance the national economy as over 40% of all bank-held loans are non-performing. Efforts to create an NPL market to service these loans – a requirement under the ESM agreement – have been halting. As a result, businesses of all sizes struggle to obtain bank loans to support their operations.

 

In January 2016, Greece and its lenders began a first review of the country’s compliance with the terms of the August 2015 ESM agreement. The IMF’s participation in the ESM program remained unresolved as of March 2016. Progress on the review has been halting, leading to renewed concerns about Greece’s economic stability. The ongoing review process has renewed concerns about Greece’s economic stability. Greece’s public finances remain dependent on the support of the European Stability Mechanism.

 

Continued concern over economic and political stability within Greece has essentially frozen most new investment and caused some existing investors to scale down or withdraw entirely from the Greek market. The Trans Adriatic Pipeline (TAP) was a notable exception to this trend. In November 2015, the Greek government and TAP investors agreed on measures to begin construction in 2016 for the pipeline, which would bring natural gas from Azerbaijan to southern Europe through northern Greece.
 

Country Links
Anti-Money Laundering Counter-Terrorist Financing and Source of Funds Investigation Authority
Capital Markets Commission
Bank of Greece
Other Useful Links
FATF
US State Department
Transparency International
World Bank
CIA World Factbook

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