Is it legal for the authorities in the Republic of Northern Cyprus to keep my passport? I’m in Northern Cyprus and the police have taken my passport from me because of a personal dispute with a friend over money. I am an American citizen.
The police can take action to prevent you from fleeing if you are suspected of a crime. With Cyprus being an island, taking your passport away is a simple way to keep anyone but the most determined criminal from leaving, without inconveniencing you too much. You will get your passport back, either when any misunderstanding is cleared up, or when you leave jail (we don't know the details of this "personal dispute about money").
Being an American citizen doesn't actually make any difference. Even if the USA had a diplomatic presence in Northern Cyprus, which they don't, there's not much they can do or could do or would want to do to help if the police is after you.