BANK OF CYPRUS CLOSES ACCOUNTS OF RUSSIAN CLIENTS - Forbes

 Cyprus Mail 18 April 2023 - by Cyprus News Agency

The Bank of Cyprus has begun notifying its clients who are Russian citizens that their accounts will be closed, the Russian edition of Forbes magazine reported on Tuesday.

Forbes cited Main Partner Trust, a company that provides financial services to its clients in Cyprus and said it confirmed the information by a source in the banking sector.

According to the director of Main Partner Trust, Alyona Sakharova, the bank started sending information letters last week. In the notices sent to its customers, the bank notifies them that their accounts will be closed within two months from the moment they receive the notification because the user’s data does not meet the regulations of the “know your customer” procedure.

As Main Partner Trust explains, one of the reasons for these actions taken by the bank in relation to its Russian customers may be the status of a resident taxpayer in Russia.

Moreover, the reason for closing an account may be the existence of income from business activity in Russia subject to sanctions, such as dividends or salaries of employees of companies subject to sanctions who work by telecommuting. Another reason is people who have a ‘visitor’ visa or residence in Cyprus with a ‘digital nomad’ visa.

Forbes’ Russian banking source says that the Bank of Cyprus has closed accounts of Russians in the past. Often even old accounts of clients who have been living in Cyprus for years were subjected to this procedure.

Problems with account closures are not only faced by Bank of Cyprus customers but also by those who are served at branches of Hellenic Bank and Alpha Bank, Forbes writes.

Main Trust Partner attributes the closure of Russian bank accounts to fears of British and US sanctions, which prohibit the provision of consulting, marketing, IT, legal and technical services to companies and individuals from Russia.

The restrictions on the Cypriot bank are related to the recent extension of US blocking sanctions for helping to circumvent previous sanctions. Bank of Cyprus is expending significant resources to comply with all restrictions. In such a situation, it is easier for the bank to close Russian accounts than face fines or other problems, according to lawyers interviewed by Forbes.

The Bank of Cyprus is considered the largest in Cyprus. At the end of last year, Russians (excluding Cypriot companies owned by Russian citizens) held more than seven hundred thousand euros in bank deposits, 6 per cent more than the previous year. About 15 per cent of all Russians living in Cyprus may have accounts with the Bank of Cyprus. The bank currently has no operations in Russia and Ukraine, the credit institution said in a report, as it sold its Russian “subsidiary”, Uniastrum Bank, in 2015.

The US Office of Foreign Assets Control (OFAC) which monitors compliance with sanctions and also maintains a Specially Designated Nationals And Blocked Persons List (SDN) list. Being placed on the SDN list means that a bank’s US assets are frozen and it is prohibited from making dollar payments to any US counterparty. It is also prohibited to buy foreign stocks and currencies through brokers of these banks.

In 2022, the US Department of Justice created the KleptoCapture group to monitor whether those who were sanctioned in response to Russia’s invasion of Ukraine are complying with sanctions.