The Enforcement of Temporary Restrictive Measures

NICOSIA, Cyprus - June 14, 2013 - PRLog -- The Ministry of Finance and the Central Bank of Cyprus (“CBC”) issued a decree on 27 March 2013 with regards to the enforcement of temporary restrictive measures on banking transactions in Cyprus. The Enforcement of Temporary Restrictive Measures on Transactions in case of Emergency Fourteenth Decree of 2013 (“the Fourteenth Decree”) was issued on the 31May 2013 and will be in place for seven days. It is expected that the restrictive measures imposed on the banking system will gradually be relaxed.

We would like to highlight that these restrictive measures do not apply to funds transferred to Cyprus from abroad after 15 March 2013.

The Fourteenth Decree stated the following provisions:

• The cashing of cheques is forbidden. Cheques can only be deposited in bank accounts.

• All non cash transactions and/or transfers of funds outside Cyprus are prohibited with the exception of transactions that are within the normal business activities of the company, upon presentation of supporting documents, in the following cases:

1.    payments/transfers of up to EUR 500,000 per transaction are not subject to the Central Bank of Cyprus Committee’s approval;

2.    payments/transfers from EUR 500,001 to EUR 1,000,000 per transaction are subject to the approval of the Committee. The Committee will take its decision, within 24 hours taking into consideration the liquidity buffer situation of the credit institution;

3.    payments/transfers above EUR 1,000,001 per transaction are subject to the approval of the Committee, taking into consideration the justifying documentation provided, and liquidity buffer situation of the credit institution.

• The withdrawal of fixed deposits prior to their due date is prohibited unless the funds are used to repay a loan and/or overdraft and/or credit card within the same credit institution, subject to certain criteria.

• Upon maturity of fixed term deposits, the higher amount between EUR 5,000 or 20% of the total amount of the deposit in question, will be either transferred to a sight/current account or be deposited in a new fixed term deposit in the same credit institution, the balance shall be extended for one month.

• Further to arrangements with the customs department, any person travelling outside Cyprus is forbidden to carry an amount exceeding EUR 3,000 per person or its equivalent in any other currency.

• All banking institutions are restricted from effecting payments whose purpose is the avoidance of the restrictive measures.

• The opening of a new account for any individual/corporate who is not an existing customer of a credit institution on the date of entry into force of the Enforcement of Temporary Restrictive Measures on Transactions in case of Emergency Sixth Decree of 2013, is prohibited unless the account will only be credited with funds transferred from abroad to the Republic, or the prior approval of the Committee is obtained.

The issuance of the Fifth Decree on The Enforcement of Restrictive Measures on Transactions in case of Emergency Law of 2013 (the “Fifth Decree”) allows for a significant lifting of restrictions for international customers in foreign banks approved by the Central Bank of Cyprus.

A list of credit institutions has been included in the Annex of the aforementioned legislation and is listed below:
1.    Arab Jordan Investment Bank SA;

2.    Bank of Beirut SAL;

3.    BankMed SAL;

4.    Banque BEMO SAL;

5.    Banque SBA;

6.    Barclays Bank PLC;

7.    BBAC SAL;

8.    BLOM Bank SAL;

9.    Byblos Bank SAL;

10. Credit Libanais SAL;

11. Jordan Ahli Bank plc;

12. Lebanon and Gulf Bank SAL;

13. OJSC Promsvyazbank;

14. Privatbank Commercial Bank;

15. Russian Commercial Bank (Cyprus) Ltd.

As per the Fifth Decree any international customers of a credit institution listed above may effect any cashless payment/transfers of deposits/funds for their own account or by the order of an international customer, to an entity outside the Republic. International customers of the approved credit institutions are not subject to any restrictive measure imposed under any other decree issued under the law.  

International customers were defined as those of an approved credit institution who were not resident in Cyprus or whose ultimate beneficial owners were non Cyprus resident natural persons or a company listed on a recognized stock exchange outside of the Republic of Cyprus.

The above-mentioned points outline the key provisions of the relevant legislation and provide a general overview. For further details regarding the above changes in the legislation imposed on the Cypriot banking sector and how it impacts your business operations please contact Charles Savva at +357 22 516 671, or by email c.savva@savvacyprus.com.