The report on the CBS show "60 Minutes" about Russian oligarchs was referred to by the Finance Minister in his detailed response on the issue. Mr. Petrides talked about false reports that initially put the employees of the Cyprus Consulate in Kyiv in danger and that are still circulating today, including claims that Cyprus is failing to implement the EU sanctions that have been imposed on them.
Over the past ten years, as a government, we have made significant strides in the areas of transparency and anti-money laundering.
The Minister's statement is as follows:
Cyprus has been on the side of the European Union, unequivocally supporting Ukraine and its people, since the first second after Russia invaded Ukraine. Despite the negative effects that the sanctions would have on the Cypriot economy, Cyprus played a constructive role in both the adoption and implementation of sanctions against Russia as an EU member and in solidarity with the suffering Ukrainian people. impacts that might have been excessive in comparison to other EU nations.
From the moment the sanctions were adopted, "information" that painted Cyprus as opposed to the sanctions began to circulate in the international press. For instance, Cyprus was allegedly exercising its veto over the prohibition of transactions by Russian banking institutions using SWIFT. Fake news even caused a disturbance in front of the Cyprus Consulate in Kyiv, endangering the staff and forcing the government of Cyprus to issue denials.
This false information has persisted, and there are now claims that Cyprus is not effectively enforcing European sanctions or that it still serves as a safe haven for the money of Russian oligarchs.
The reality has changed significantly from the pre-2013 period, when some of what was said in the form of statements in the CBS report was true, in regards to the exposure of the Cypriot economy and Russian capital in Cyprus.
Since the exposure of our banking sector to Russia is much lower than what is often presented in the international press and is close to the level of most European countries, I feel the need to clarify the facts that apply today and show the falsity of the statements, proving a completely opposite picture from the one that is being implied.
Total loans with exposure to Russia made up just 0.8% of all loans by the end of 2021.
Despite the fact that a sizeable Russian community lives and works in Cyprus without any connection to the sanctioned entities, the total amount of deposits with exposure to Russia represented only 3.8% of all deposits during that time period (up from 40% in 2013). This sum is a far cry from the €5.6 billion claimed by CBS to be the exposure of the Cypriot banking system to Russia. This exposure is actually less than €1 billion. It is regrettable that an international news network would report such errors.
In relation to the anti-money laundering framework, banking institutions in Cyprus have recently interpreted and applied the framework concerning customer identification in the strictest possible ways. As you are aware, complaints from both investors and citizens as well as business owners and entrepreneurs are frequently the result of this practice. The MONEYVAL Report 2019 provides evidence of this practice, which resulted in the closure of over 80,000 accounts and the denial of thousands more account opening requests. According to a recent European Parliament report, many of them have even opened accounts without much difficulty in other European nations or particular US states. The assertion that it is simple to open a bank account in Cyprus made by some does not hold up, possibly in contrast to the countries from which they come.
Contrary to other European nations, Cyprus does NOT hold any reserves of the Central Bank of Russia.
I must make the following clarifications in relation to the imposition of sanctions:
The Mutual Evaluation Report (MER) of Cyprus by MONEYVAL also provides comprehensive documentation of the framework for the application of sanctions in Cyprus. The report contains a thorough account of the on-site inspections of financial entities that supervisory authorities, such as the Securities and Exchange Commission, the Central Bank of Cyprus, and other supervisory authorities carry out in order to determine whether sanctions should be imposed.
In addition to this framework, the Government decided by a decision of the Council of Ministers in June 2021 to establish and operate a "National Sanctions Enforcement Unit," similar to the UK's Office for Financial Sanctions Implementation (OFSI), which does not exist in many other countries. This decision was made due to the complexity and the numerous agencies involved in the sanctions process. The Ministry of Finance, the Central Bank of Cyprus, and the Legal Service will all be part of the Unit, which will be in charge of overseeing the application of sanctions.
Additionally, Cyprus has ratified and put into effect all European anti-money laundering directives (AML). International organizations like MONEYVAL and the European Union both keep an eye on Cyprus during this implementation.
All bank accounts and their beneficial owners—the real people behind the corporate entities—are listed in bank account registers that the Central Bank of Cyprus developed and oversees.
In terms of sanctions, commitments from credit institutions totaling €105 million have been made so far:
Commitments from investment firms with Cypriot registrations in the neighborhood of €720 million.
Pledges of an additional €719 million in funds held by companies under the Cyprus Securities and Exchange Commission's supervision known as administrative service providers.
The Department of Land Registry and Surveying conducts property connections and checks on any transfer or purchase transaction for entities covered by the sanctions regime.
The Registrar of Companies conducts inspections and imposes freezes in the sense of prohibiting the performance of acts during which Cypriot companies connected to individuals are subject to sanctions transfer, change shareholding, sell, etc.
The Company Registrar's Department has discovered quite a few businesses in its database that are connected to Russian nationals who have been subject to sanctions, either through their appointment as officers (directors and secretaries), shareholders or even as beneficial owners.
To date, 63 individuals and 96 of their dependents, a total of 159 individuals, have had their Cypriot citizenship revoked by the Council of Ministers. 10 of these have 31 dependents and are subject to the sanctions regime.
I want to emphasize that the Cypriot government works closely with the EU and that the EU's competent authorities, as well as those of other Member States to which they provide data, are responsible for coordinating the consistent application of sanctions. As an EU member state, the Republic of Cyprus has a responsibility in this regard.
Regarding seizures, I would like to emphasize that the EU sanctions only involve the freezing of assets rather than actual seizures. In fact, the European Union's stance on sanctions is to avoid any confiscation because, legally speaking, it could result in claims from the owners or even compensation. Because of this, Cyprus, like the majority of European nations, imposes EU sanctions that involve freezing assets rather than seizing them.
The same holds true for disclosing a nominal list that contains personal information. The acquis communautaire on the protection of personal data prohibits this, even for those who are subject to sanctions.
As a final point, I want to emphasize that Cyprus employs a framework that is effective in preventing money laundering and enforcing sanctions. a system that has permanently fixed many of the historical distortions and errors. a framework that is continually being improved by adding new rules to reflect developments around the world. This also holds true for the imposition of sanctions against Russia.
Cyprus is constantly being scrutinized for its money laundering policies, use of mysterious entities, and sanctions enforcement. By the rating agencies themselves, which take these issues very seriously in their evaluations of each nation's economies, by the European Union itself, by international organizations like MONEYVAL, and by the rating agencies' own members. The reports from the aforementioned organizations and the improvements to the Cypriot economy show the complete opposite of the often-projected picture of poverty or inactivity. It is especially regrettable that politicians at home are supporting or promoting this perception abroad in an effort to advance their own small political interests.
Over the past ten years, as a government, we have made significant strides in the areas of transparency and anti-money laundering. international recognition of progress. Additionally, errors have been made that have damaged Cyprus' reputation abroad, particularly in relation to the Cyprus Investment Program. However, the significant advancement that has been made recently and must continue cannot be undone by these errors.