From the very first moment after Russia's invasion of Ukraine, Cyprus has stood by the European Community, unequivocally supporting Ukraine and its people. As a member of the EU, and as a sign of solidarity with the suffering Ukrainian people, Cyprus played a positive role in both the adoption and implementation of sanctions against Russia, despite the adverse impact they would have on the Cypriot economy.
From the beginning of the adoption of the sanctions, "information" was circulated in the international press that presented Cyprus as opposing the sanctions, such as, for example, an opposition or veto that allegedly Cyprus was placing on the prohibition of transactions through SWIFT by Russian Banking Institutions.[/B]
From the beginning of the adoption of the sanctions, "information" was circulated in the international press that presented Cyprus as opposing the sanctions, such as, for example, an opposition or veto that allegedly Cyprus was placing on the prohibition of transactions through SWIFT by Russian Banking Institutions. Fake news that even created unrest outside the Cypriot consulate in Kiev, endangering staff, and forcing the Cypriot government to issue denials.
This disinformation was followed up with rumours of Cyprus' ineffective implementation of European sanctions, or that Cyprus continues to be a haven for Russian oligarchs' funds.
With regard to the exposure of the Cypriot economy and Russian capital in Cyprus, the reality has changed significantly from the pre-2013 period, which is the period in which some of what was said in the form of statements in the CBS report was true.
That is why I feel the need to clarify the facts that apply today and demonstrate the unsubstantiality of the statements, proving a completely opposite picture to the one that has been suggested, since the exposure of our banking sector to Russia is significantly lower than what is often presented in the international press, and close to the level of most European countries.
- By the end of 2021, total loans with exposure to Russia accounted for only 0.8% of total loans.
- In the same period total deposits with exposure to Russia represented only 3.8% (up from 40% in 2013) of total deposits, of which two-thirds are interbank deposits, and despite the fact that a relatively large Russian community lives and operates in Cyprus, but has no connection to the sanctioned entities. This figure is a far cry from the CBS claim that the Cypriot banking system's exposure to Russia is €5.6 billion. In reality, this exposure does not exceed €1 billion. It is regrettable that such inaccuracies should be told by an international news network.
- Banking institutions in Cyprus have in recent years interpreted and applied in the strictest way the framework concerning the identification of customers in relation to the anti-money laundering framework. This practice is the reason why, as you know, there are very often complaints from investors, entrepreneurs and citizens alike. This practice, documented by the MONEYVAL Report 2019, has led to the closure of more than 80,000 accounts and the rejection of account opening requests to thousands of others. Many of them have even opened accounts in other European countries or specific US states without much difficulty as a recent European Parliament report found. The claim by some that it is easy to open bank accounts in Cyprus does not hold water, possibly in contrast to the countries from which they come.
- Cyprus does NOT hold any reserves of the Central Bank of Russia, unlike other European countries.
In relation to the imposition of sanctions, I must clarify the following. The report includes a detailed record of how financial sector supervisory authorities, including the Central Bank of Cyprus, the Securities and Exchange Commission, and other supervisory authorities conduct on-site inspections of financial entities in relation to the imposition of sanctions.
In addition to this framework, due to the complexity and the various agencies involved in the sanctions process, the Government, by a decision of the Council of Ministers in June 2021, decided to establish and operate a "National Sanctions Enforcement Unit", along the lines of the UK's Office for Financial Sanctions Implementation (OFSI), which does not exist in many countries. The Unit will oversee the enforcement of sanctions and will include, among others, the Ministry of Finance, the Central Bank of Cyprus, and the Legal Service.
Cyprus has also adopted and implemented all the European Anti-Money Laundering (AML) Directives. For this implementation it is monitored both by the European Union and by international organisations such as MONEYVAL.
And the Central Bank of Cyprus has developed and manages bank account registers which record all bank accounts and their beneficial owners, i.e. the natural persons behind corporate entities.
In terms of sanctions, to date there have been:
- Commitments of amounts from credit institutions of €105 million
- Commitments of amounts from investment companies registered in Cyprus of €720 million
- Commitments of another €719 million of funds held by Administrative Service Providers supervised by the Cyprus Securities and Exchange Commission.
- When carrying out any transfer or purchase transaction, checks and property attachments are carried out by the Department of Land Registry and Surveying for entities under the sanctions regime.
- During acts of transfer/change of shareholding/sale etc. of Cypriot companies associated with persons under sanctions regime, checks are carried out by the Registrar of Companies and freezes are carried out in the sense of a prohibition to carry out the act.
- The Company Registrar's Department has identified quite a large number of companies in its system which are linked to sanctioned Russian nationals either appointed as Officers (Directors and Secretaries) or as Shareholders or even as beneficial owners.
- To date, the Council of Ministers has approved the initiation of the procedure to deprive 63 persons and 96 of their dependants of Cypriot citizenship, a total of 159 persons. Of these 10 persons are under the sanctions regime with 31 dependants.
I would like to underline that the Cypriot authorities are in constant contact with the European Union and the competent European authorities, but also with the competent authorities of other Member States to which they provide the information, are accountable, but also coordinate for the uniform enforcement of sanctions. This is an obligation of the Republic of Cyprus as an EU Member State.
With regard to confiscation, I would like to point out that the EU sanctions do not include confiscation, but freezing of assets. Indeed, the position of the European Union in the relevant committees on sanctions is to avoid any seizures since legally they can lead to claims from owners or even compensation. It is for this reason that Cyprus, like most European countries, applies the EU sanctions concerning the freezing of assets and not their confiscation.
The same applies to the publication of a nominal list that includes personal data. This is not permissible under the acquis communautaire on the protection of personal data even of persons under sanctions.
In conclusion, I would like to stress that Cyprus applies an effective framework concerning the fight against money laundering and the enforcement of sanctions. A framework which has irreversibly corrected many of the distortions and mistakes of the past. A framework that is constantly being upgraded by incorporating new regulations in line with international developments. The same applies to the implementation of sanctions against Russia.
For its policies against money laundering, opaque entities and the enforcement of sanctions, Cyprus is under constant scrutiny. By the European Union itself, by international organisations like MONEYVAL, by the rating agencies themselves who take these issues very seriously in their assessments of the economies of each country. The reports of the above organisations, as well as the upgrades of the Cypriot economy, demonstrate the opposite picture from that of poverty or inactivity, which is sometimes projected. It is particularly unfortunate that this image is reinforced or promoted abroad by politicians at home in an attempt to gain petty party benefits.
As a government, we have made great progress over the last ten years in terms of anti-money laundering and transparency. Progress that is recognised internationally. At the same time, mistakes have been made, particularly with regard to the Cyprus Investment Programme, which have cost Cyprus' image abroad. But these mistakes cannot undo the tremendous progress that has been made in recent years and which must continue.
(ΕΠ/ΣΧ)
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