The largest bank in Cyprus, Bank of Cyprus (Bank of Cyprus), has begun informing its clients who are Russian citizens about the closure of their accounts, writes the Russian edition of Forbes magazine, citing Main Partner Trust, which provides financial services to its clients in Cyprus. This information was confirmed to Forbes by a source in the banking sector.

According to Alena Sakharova, director of Main Partner Trust, last week the bank began sending information letters. In the letters that it sends to its customers, the bank informs them that their accounts will be closed within two months from the receipt of the relevant information, since the user details do not comply with the rules of the “know your client” procedure.

According to Main Partner Trust, one of the reasons for the bank’s actions in relation to its Russian clients may be the status of a Russian tax resident. Also, the reason for closing the account may be the presence of income from business activities in Russia that are subject to sanctions (for example, dividends or wages of employees of sanctioned companies who work remotely), as well as an “unofficial” residence permit. (guest visa) or stay in Cyprus with a digital nomad visa.

A source for the Russian edition of Forbes in the banking market says that the Bank of Cyprus closed the accounts of Russians in the past. Even old accounts of clients who have been living in Cyprus for years have often been subjected to this process.

Problems with closing accounts arise not only for Bank of Cyprus customers, but also for those who are served in the branches of Greek banks Hellenic Bank (Hellenic Bank) and Alpha Bank, writes Forbes.

Main Trust Partner explains the closure of accounts in Russian banks with fears of sanctions from the UK and the US. They prohibit the provision of consulting, marketing, IT, legal and technical services to companies and individuals from Russia. The restrictions on the Cypriot bank stem from the recent extension of US embargo sanctions to help circumvent previous sanctions. The Bank of Cyprus spends significant resources to comply with all restrictions. In such a situation, it is easier for a bank to close Russian accounts than to 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) kept more than seven hundred thousand euros in bank deposits. This is six percent more than last year. About 15% of all Russians living in Cyprus may have accounts with the Bank of Cyprus. The bank currently does not operate in Russia and Ukraine, the credit institution said in a statement. In 2015, he sold his Russian subsidiary, Uniastrum Bank.

The US Treasury has an Office of Foreign Assets Control (OFAC) that enforces sanctions. It also supports the SDN directory. The inclusion of a bank in the SDN list means freezing of its assets in the US and a ban on making dollar payments to any counterparty in the US. The purchase of foreign shares and currencies through the brokers of these banks is also prohibited.

In 2022, the US Department of Justice created the KleptoCapture team to enforce sanctions imposed in response to Russia’s invasion of Ukraine.

Source: RES-IPE