31 January 2019

In 2018, Cyprus banks received the direction from the Central Bank to close the accounts of not only offshore companies, but also of Cyprus companies that do not conduct real activities.

According to the newspaper Phileleftheros, within 3 years only, the Bank of Cyprus has closed or frozen 5.359 accounts worth 3.6 billion euros belonging to Russians and Ukrainians.

The number of clients from these countries decreased by 60%. In addition, OFAC insists on strict adherence to US sanctions and threatens banks (the Central Bank of Cyprus) with penalties for trying to help individuals and companies from the sanctions lists.

According to the new rules, Cyprus will begin to open accounts or maintain relationship with already existing clients, mainly with those companies and individuals who have a real presence (substance). in Cyprus.

Read on the website (click on the link): Creating substance (office) in Cyprus - Legal services for businesses.

INFORMATION REQUESTED BY CYPRUS BANKS

A Cyprus company should provide the bank with a complete package of documents to demonstrate who is the true beneficiary and what are the sources of the funds for carrying out business activities.

The bank requests from a Cyprus company: passports and tax identification numbers of owners (shareholders); proof of the beneficiaries’ residential address; bank and professional reference letters; statements of accounts from other banks; company resume indicating current professional activities; documentary evidence of the legitimacy of the funds’ source.

Already existing accounts of Cyprus companies will be periodically checked to ensure the company’s legal compliance and to verify the viability of the transactions being carried out.

IMPORTANT: Regarding the companies that opened earlier, the bank requests for confirmation of:

• Keeping financial records and asks to provide them to the bank
• Existence of assets. It is of importance that agreements for the supply of goods / services or debts receivable are not considered an asset, only investments in securities, etc.

Read on the website (click on the link): Personal or corporate bank account in the UAE - Legal services for businesses. .

IMPORTANT: The bank scrutinizes the documents provided and is very selective in opening accounts even for your lawful money.

All the above has to do not only with violators, corrupt officials and people from the sanctions lists. Some businesses are too complicated or incomprehensible to the bank, or the companies’ investors are associated with a risky business for the bank (for example, air transportation, production of alcoholic or pharmaceutical products, etc.)

Planning a business strategy abroad (in our case, it is Cyprus) requires now not only time, but also careful attention and study of the topic. It is not just about opening a company. A company also needs an account, which is not that easy to open in certain jurisdictions, and sometimes even impossible.

Especially if you are trying to do it by yourself, without any professional support.

That is why we offer our clients consultations on how to choose a bank account, as well as a quick “pre-approval” procedure (i.e., preliminary agreement with the bank) regarding the feasibility of applying to the bank and collecting a full package of documents. Usually, if banks have agreed to work with a particular client upon preliminary agreement, there will be no obstacles to open an account.

Perhaps it is high time to think about at least a partial decentralization of the funds, from Cyprus to a safer place. Book an online consultation right now: info@papadimitri.com

Documents necessary to open an account in a foreign bank

Be prepared to submit a comprehensive list of documents for opening your foreign bank account. In addition to the company’s documents, you will also need to provide the bank with a copy of the signatory and beneficiary's passport, properly certified in accordance with the requirements of the bank. Furthermore, you will be asked to submit a utility bill as proof of place of residence (a residence permit is also accepted). Now all banks require a letter of reference from another bank, which will state that the person in question has been a client of this bank for a certain number of years.

Summing up, we would like to note the following ...

It is strictly subject to your goals and objectives whether to open an account in Cyprus or not. Clearly, it will be quite difficult for those who have come under the sanctions, and it will be bothersome for them everywhere.

For those who continue to work and are not involved in the restrictive measures, Cyprus can offer certain advantages.

In any way, there is no need to limit yourself and your business to one single bank account. The crisis taught us how to cover all the bases and open more than one account, and preferably in different jurisdictions. For example, you might be thinking about opening an account in Switzerland or the UAE or even establishing a branch in Serbia and getting a European account there. If you have any questions or need further information regarding the choice of a foreign bank, please contact us at info@papadimitri.com