Cyprus banks allowed US-sanctioned Russian clients to withdraw money from their accounts

Cyprus banks allowed US-sanctioned Russian clients to withdraw money from their accounts
Photo: Yiannis Kourtoglou / Reuters

Cypriot financiers recommended bank clients from Russia to avoid dollar payments.

Banks of Cyprus froze accounts of Russians who fell under the US sanctions, but allowed their clients to withdraw money to their accounts in Russia, RBC reports citing the managing director of the Cyprus consulting firm B2B Lateral Thinking Solutions, Kostas Demetriades.

Demetriades noted that he has no specific information about the frozen accounts of any of the Russians who fell under the sanctions. A source of RBC, close to one of the largest banks in Cyprus, confirmed that the structures connected with one of the Russians of the Specially Designated Nationals and Blocked Persons (SDN) sanctions list were allowed to close their accounts and withdraw money.

The Cypriot banks also recommended that Russian clients to avoid operations in the US dollar, since there can be bank problems on the side of the American correspondent, added Demetriades.

The Ministry of Finance of Cyprus stressed that banks are forced to follow the new rules that came into force after the introduction of US sanctions. "Cyprus banks really take into account the fact that, having relations with individuals from the US SDN list, they inevitably fell under the risk of secondary sanctions under CAATSA," said a representative of the Cyprus Ministry of Finance.

In August, the US Treasury announced that bank accounts of Oleg Derapaska and Viktor Vekselberg had been frozen in Cyprus. A representative of the Renova group, controlled by Vekselberg, then stated that the businessman did not have a personal account in Cyprus, and the affiliated structures did not have significant funds in Cypriot banks.

After the adoption of the CAATSA law, the US authorities conducted special works with Cyprus. Representatives of the US Treasury met with the leadership of the Cyprus Central Bank. After that, the leaders of local banks were recommended to pay "close attention" to the accounts of Russian individuals and companies included in the sanctions lists of the United States and the EU and take measures against them. The Cyprus Securities and Exchange Commission (CySEC) recommended not to start business relations with the persons involved in the sanctions list and consider the possibility of freezing current customers' accounts Similar recommendations were issued by the Cyprus Bar Association.

Currently 33 banks are registered in Cyprus. The largest of them - the Bank of Cyprus - stated that it does not provide services for customers from the SDN list, and the excised accounts would be frozen. A representative of the Ministry of Finance of Cyprus announced that "every bank can take any measures that it considers appropriate" in connection with the US sanctions. If a credit organization voluntarily agrees to support the restrictions, it does not violate anything, said Aki Corsoni-Hussein, a partner of Harneys law firm specializing in offshores.

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