NICOSIA – Under pressure from the United States to crack down on money-laundering operations, with the island seen a haven for tax cheats and the rich, Cyprus’ Central Bank is making it more difficult for shell companies to operate.

Through an email, the bank advised compliance officers within financial credit institutions of a new directive which basically amounts to telling banks to avoid commercial relations with clients who represent shell companies, Kathimerini reported.

A number of law firms in Cyprus are known to act as brokers in setting up front companies for their clients, but the practice is widely unregulated, the paper said.

The new rules will make it harder for companies to do business in Cyprus if they have no physical presence or do not engage in economic activity on the island in a bid to prevent front companies from being set up.

The directive expands the bank’s definition of “shell companies” aimed at companies based in tax havens or offices that have no tax residence.

The Cyprus Fiduciary Association (CFA) said the bank should have consulted with stakeholders to create a different model because the problem of shell companies has been well-known. The group wanted a directive focusing more on business activities on the island.

Cyprus, which needed a 10-billion euro ($11.64 billion) international bailout in 2010 after bad loans to Greek businesses and big holdings in devalued Greek bonds almost brought down the banks and the economy, has been described as a “country of primary concern” by the United States about money laundering and terror funding activities.

A 2015 US State Department report called Cyprus an intermediary between criminal enterprises seeking avenues to launder money, a label the country hasn’t fully been able to shake even as it has recovered on the back of austerity and big tourism seasons.

The government instituted some reforms when the crisis emerged in 2013 and a few months ago chose an American public relations firm to improve the country’s image.

That comes as a new casino resort in Cyprus that is expected to be Europe’s biggest will be the centerpiece of the Mediterranean island’s strategy to become a luxury tourism destination and draw gamblers, big spenders and money from around the world.

President Nicos Anastasiades said the 550 million euro ($651 million) City of Dreams Mediterranean casino resort is the biggest investment project ever undertaken in Cyprus.

He said that once operational in 2021, the resort will create around 6,500 jobs, attract an additional 300,000 visitors to Cyprus each year and pour some 700 million euros ($828.5 million) into the economy annually.

The FBI in December, 2017 asked Cypriot officials for financial information about the defunct FBME bank used by wealthy Russians with political connections and has been accused by the US government of money laundering, sources told the British newspaper The Guardian.

The Central Bank introduced a stricter anti-money laundering policy at the end of 2013 and has launched a campaign to inform the global community about what it’s doing. An unpublished opinion poll showed financial supervisors around the world felt the country’s laws were outdated, the Cyprus Mail said.