The largest bank in Cyprus, Bank of Cyprus, has started to inform its Russian customers that their accounts will be closed, writes the Russian edition of Forbes magazine citing the company Main Partner Trust, which provides financial services to its clients in Cyprus.
This was confirmed to Forbes 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 letters it sends to its customers, the bank informs them that their accounts will be closed within two months from the moment they receive the relevant information, because the user's details do not meet the regulations of the "know your customer" process.
As the company Main Partner Trust clarifies, one of the reasons for the actions taken by the bank in relation to its Russian clients may be the tax resident status of Russia.
Also a reason for closing an account can be the existence of income from business activity in Russia that is subject to sanctions (for example, dividends or salaries of employees of companies subject to sanctions who work remotely), as well as "informal" residence permit (visa "visitor") or stay in Cyprus with a "digital nomad" visa.
A source of the Russian edition of Forbes in the banking market says that the Bank of Cyprus has closed the accounts of Russians in the past. Even old customer accounts, who have been living in Cyprus for years, were often subjected to this process.
Problems with closing accounts are not only faced by customers of the Bank of Cyprus, but also those who are served in the branches of the Greek banks Hellenic Bank and Alpha Bank, writes Forbes.
Main Trust Partner attributes the closure of Russian bank accounts to fears of British and US sanctions. They 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 embargo sanctions to help circumvent previous sanctions. Bank of Cyprus spends significant resources to comply with all restrictions.
In such a situation, it is easier for the bank to close the Russian accounts than to face fines or other problems, according to lawyers interviewed by Forbes.
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 700,000 euros in bank deposits. This is six percent more than last year.
About 15% of all Russians living in Cyprus may have accounts at the Bank of Cyprus. The bank currently has no operations in Russia and Ukraine, the credit institution said in a report. It sold its Russian "subsidiary", Uniastrum Bank, in 2015.
Within the US Treasury Department is the Office of Foreign Assets Control (OFAC) which monitors sanctions compliance. It also maintains an SDN directory. Putting a bank on the SDN list means freezing its US assets and barring it from making dollar payments to any US counterparty.
Buying foreign stocks and currencies through brokers of these banks is also prohibited.
In 2022, the US Department of Justice created the KleptoCapture team to monitor compliance with sanctions imposed in response to Russia's invasion of Ukraine.
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