A new bill headed for the House seeks to criminalize loan sharking in an effort to control illegal internet gambling in Cyprus. Loans from private entities are not illegal under the current framework, and loan sharks have gotten out of control. In Cyprus, loan sharking and profiteering often go hand-in-hand with illegal gambling operations, both online and offline.
Cypriot gambling laws allow for online gambling, but many sites that offer internet gambling services to local players are unlicensed and unregulated. Players who let their losses get out of control at these sites sometimes find themselves facing threats, blackmail, or other forms of intimidation. Private lenders in Cyprus take advantage of the country’s love of gambling, exploiting players for profit.
The new rules won’t ban all forms of person-to-person lending, but will put strict limits on what types of non-bank loans are legal, and how they can be drawn up. Limitations will be placed on interest rates especially, to keep them from reaching too high. Cypriots who have debts and find trouble securing proper bank loans have in the past succumbed to extortionate interest rates levied by loan sharks, which only compounds the problem.
This is just the first step in tackling the country’s online gambling issues. Criminalizing loan sharking will help prevent people who rack up gambling debts from becoming victims of loan sharks, but the heart of the issue lies with poorly-regulated online gambling sites in Cyrpus. The government is planning to crack down on this end as well, filtering the internet and blocking payment methods to stamp out illegal online poker and casino sites. It is estimated that as many as 400 illegally-operating online gambling sites will be shut down as a result of the upcoming purge.