According to the director of Main Partner Trust Alyona Sakharova, the bank started sending information letters last week
File photo.
The Bank of Cyprus has started to inform its customers who are citizens of Russia 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 customers in Cyprus. This information 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” procedure.< /p>
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.
Problems with closing accounts are not only faced by Bank of Cyprus customers, but also by those served at Hellenic Bank and Alpha Bank branches, writes the Forbes.
Main Trust Partner attributes the closure of Russian bank accounts to fears of UK and US sanctions, which ban 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 seven hundred thousand euros in bank deposits, 6% percent more than the previous year. About 15% of all Russians living in Cyprus may have Bank of Cyprus accounts. 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 Treasury Department has the Office of Foreign Assets Control (OFAC) which monitors sanctions compliance, while also maintaining 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 these banks' brokers is also prohibited.
In 2022, the US Department of Justice created the KleptoCapture team to monitor whether those sanctioned in response to Russia's invasion of Ukraine are complying with these.
