Largest bank in Cyprus closing Russian accounts

The largest bank in Cyprus, Bank Of Cyprus, has started sending notifications to customers – Russian citizens that their accounts will be closed.

On this subject writing Forbes, citing Main Partner Trust, which provides comprehensive services to clients in Cyprus. This information was also confirmed on publication by a source in the banking sector, according to The Eastern Herald.

In letters to customers, the bank informs that their accounts will be closed within two months from the date of notification, because user data does not comply with the rules of the “know your customer” procedure.

As explained in the Main Partner Trust, one of the reasons for these actions of the bank vis-à-vis Russian customers may be the tax resident status of Russia. In addition, the reason for closing an account may be the presence of income from a company under sanctions in Russia (for example, dividends or salaries for employees of sanctioned companies working remotely), as well as an “atypical” residence permit (“visitor” visa) or staying in Cyprus with a “digital nomad” visa.

The source of the banking market publication indicates that Bank Of Cyprus has already closed accounts for Russians. Moreover, even old accounts of customers who have lived in Cyprus for a long time have fallen under this procedure.

Account closure issues have arisen not only for Bank Of Cyprus customers, but also for those served by Greek Hellenic Bank and Alpha Bank, writes Forbes.

The decision to close the Russians’ accounts in the main trusted partner is associated with fears of British and American sanctions. They prohibit the provision of consulting, marketing, IT, legal and engineering services to businesses and individuals in Russia. The Cypriot bank’s restrictions stem from the recent extension of US blocking sanctions for helping circumvent previous sanctions. Bank Of Cyprus is spending significant resources to comply with all restrictions. In such a situation, it is easier for the bank to close the Russians’ accounts than to receive a fine or other problems, according to lawyers interviewed by Forbes.

Bank Of Cyprus is considered the largest in Cyprus. According to last year’s results, Russians (excluding Cypriot companies owned by Russian citizens) kept more than seven hundred thousand euros in bank deposits. This is six percent more than the previous year. Around 15% of all Russians living in Cyprus can have Bank Of Cyprus accounts.

Currently, the bank does not conduct operations in Russia and Ukraine, according to the report of the credit institution. It sold its Russian subsidiary, Uniastrum Bank, in 2015.

The US Treasury has an Office of Foreign Assets Control (OFAC) which oversees compliance with sanctions. It also maintains an SDN list. For the bank, committing to it means freezing assets in the United States and prohibiting settlements in dollars with any American counterparty. It is also forbidden to buy stocks and foreign currencies through the brokers of these banks.

In 2022, the US Department of Justice created the KleptoCapture group, which monitors compliance with sanctions imposed in response to the Russian invasion of Ukraine.