Following the enactment of sanctions by the United States and the United Kingdom against a number of people in Cyprus, it is possible that over 4,000 Russian accounts maintained in Cypriot banks may be closed over the course of the next two months.
One newspaper said that the Bank of Cyprus had written 6,000 letters to Russian customers requesting them to affirm that they were permanently residing in Cyprus, even though the number of affected accounts has not been confirmed by any banks. According to a different report, 4,000 bank customers from Russia who do not reside continuously in Cyprus have been informed that their accounts will be canceled in two months.
What is evident is that local banks have wasted no time in adhering to the sanctions that the US and UK imposed last week; the EU is anticipated to do the same in the near future. Despite not being required by law to do so, Cypriot banks are completely complying with the sanctions, including those imposed by the United States and the United Kingdom, a local bank source said on Thursday.
According to the source, "If there were any open accounts belonging to any of these sanctioned individuals, or any other sanctions for that matter, regardless of the country or what issue they are related to, their accounts will be frozen."
"It doesn’t matter what the origin of their country is. If they have been sanctioned, their accounts will be frozen and no banking activity whatsoever will be permitted," they continued.
According to a Forbes report from April 19, the Bank of Cyprus has started informing its clients who are Russian citizens that their accounts will be terminated in two months as a result of non-compliance with laws.
According to the paper, one rationale for these closures might be a taxpayer's residency status in Russia or the existence of money from sanctioned commercial activity in Russia. Customers are informed that the information about their users does not adhere to the 'know your customer' procedure regulations.
The most recent round of sanctions against Russian citizens has an impact on Cyprus' entire banking industry. According to Andreas Kostouris, a representative of the Cyprus Bank Association, there was a "freezing of accounts of those who fall under the sanctions, regardless of nationality". He added that Cyprus' banks had been abiding by American sanctions for the past ten years.
The Central Bank governor, Constantinos Herodotou, brought up this issue during a meeting at the presidential palace on Wednesday. He said that over the past several years, 43,000 shell firms operating in Cyprus closed down while 123,000 bank accounts were closed.
When asked about the closure of Russian clients' accounts, Kostouris emphasized that thousands of accounts had been cancelled in recent years and that it was incorrect to claim that the problem solely affected persons of a particular nationality.
He clarified that this issue concerns the bank's risk assessment policy. According to him, "Banks evaluate specific countries, industries, persons and fields of activity and if the data indicates that the risk is particularly high, then they do not work with them."
By fLEXI tEAM