Over the past couple of years, the volume of third-country nationals deposits in Cyprus banks has been steadily decreasing.
Mainly Russians withdraw funds from the country.
According to the latest information from the Central Bank of Cyprus, in 2020 the volume of Russian citizens' deposits in Cyprus banks decreased by 688 million euros, compared to the same period in 2019. Compared to 2018, deposits have decreased dramatically - by 1.6 billion euros.
There is no doubt that the funds outflow from Russian depositors is associated with new measures to combat money laundering in the EU.
At the end of 2020, the total amount of deposits of third countries residents in Cyprus banks amounted to 5.95 billion euros, while in 2019 this figure was equal to 6.63 billion euros, 7 billion euros in 2018, 8.41 billion euros in 2017, 9.22 billion euros in 2016, in 10.36 billion euros in 2015, and 11.88 billion euros in 2014.
This means that as efforts to combat money laundering intensify, Russian oligarchs are more actively transferring their funds to other countries.
As you may know, in Cyprus Russian citizens have always accounted for the predominant share among depositors from countries outside the Eurozone.
Russian businesses have traditionally used accounts in Cypriot banks to place their funds. These accounts were opened by both Russian individuals and offshore companies controlled by them. However, in recent years, the Central Bank of Cyprus has significantly complicated the procedures for opening accounts, especially for passive offshore companies.
In June 2018, the Central Bank of Cyprus ordered local banks to identify shell companies and close suspicious customers accounts. To maintain an account, companies must not only disclose the beneficiary, but also indicate the source of the funds, as well as actually conduct business, provide the bank with reports and have affiliated Cypriot structures with accounts in the same bank.
It is not uncommon for Cypriot banks to block accounts or refuse to open new accounts for Russian structures that are not active and do not have a sufficient level of presence in Cyprus. An important factor in the foreign capital outflow was the systemic risks of the Cyprus economy. Finally, many are concerned about the situation in the real estate sector.
At the same time, it should be noted that against the background of a decrease in third countries residents deposits, the number of deposits from local residents in Cyprus increased.
Thus, by the end of 2020, the volume of funds from Cypriot depositors increased by 459 million euros, compared to the same period in 2019.
Apparently, this was influenced by the coronavirus pandemic, due to which locals were for a long time limited in travel and shopping, which ultimately led to the release of excess money and an increase of deposits.