Sunday

5th Feb 2023

Letter

Cyprus and Russia: Association of Cyprus Banks responds

  • (Photo: Flickr/Draig)

Following the publication on 25 September of an investigation by Andrew Rettman into Cypriot banking, EUobserver received this letter from the director general of the Association of Cypriot Banks, Michael Kammas, which we publish as a right of reply:

Letter to the editor, EUobserver

Your recent article Cyprus: Russia's EU weak link reflects an outdated perception of the Cypriot banking system, failing to note the nation's extensive, positive and continuous efforts to reform and modernise its financial sector, and instil a culture of enhanced compliance, since the economic crisis of 2011-13.

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The fact is that the Central Bank of Cyprus and other authorities have worked to re-engineer the country's financial regulations, tax transparency requirements, and bank supervisory expectations.

As a result, the members of the Association of Cyprus Banks (ACB) have significantly improved transparency, imposed strict new conditions for new and existing customers, and terminated accounts that do not meet rigorous new standards.

The whole sector has downsized to such an extent that, contrary to your report, neither the prosperity of Cyprus nor its banking industry rely on foreign bank deposits and transactions.

Cyprus's financial regulatory regime currently aligns with relevant EU standards and sanctions requirements, and adheres to appropriate United Nations Security Council resolutions.

Cypriot banks have strict sanctions compliance programs.

We're especially pleased that in Basel's 2017 Anti-Money Laundering Risk Index, Cyprus was placed in the lowest risk group, one place behind the US.

The success of the reforms is reflected in the latest figures, which provide the most accurate picture of the state of banking in Cyprus today and address many of the outdated assertions in the article.

Bank clients that are of local or European origin now vastly outnumber those from Russia and Common of Independent States countries.

In fact, less than two percent of current bank clients are from the Russian Federation, and just 0.4 percent are from Ukraine.

Client deposits from Russia have also dropped 37 percent, and now represent less than 6 percent of the total number of deposits in Cypriot banks.

At the same time, Cyprus has put into place a regulatory framework to ensure that relevant laws are adhered to effectively, and established a culture of compliance across all the members of the Association of Cypriot Banks.

Specific focus has been recently given to restricting the use of shell companies and payable through accounts.

I kindly ask that future references to the Cyprus banking system in EUobserver reflect its enhanced compliance regime, recognised progress in fighting money laundering, and ongoing commitment to continuous reform.

We would urge you to publish this letter, so that your readers can be better informed about the Cypriot banking sector as it stands today, and we would welcome a discussion about how this might be achieved.

Sincerely,

Michael Kammas.

Michael Kammas is director general of the Association of Cyprus Banks

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

Investigation

Cyprus: Russia's EU weak link?

Five years and €10bn after its EU bailout, Cyprus is a weak link in Europe's banking system - amid renewed fears on Russia money-laundering.

US steps in to clean up Cyprus

Cyprus has overlooked undertakings on bank probity made to the EU in the context of the 2013 bailout - but it might prove harder to get the US off its back.

Europe is giving more aid to Ukraine than you think

'Europeans need to pull their weight in Ukraine. They should pony up more funds.' Such has been the chorus since the start of the war. The problem is the argument isn't borne out by the facts, at least not anymore.

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