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17 June, 2024
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Spanish banks wary of Cypriot student accounts

Cypriot students hit hurdles as Spanish banks fear high-risk label

Panayiotis Rougalas

Panayiotis Rougalas

The impact of Cyprus being deemed a high-risk destination continues to reverberate even in European Union countries, with remnants of its troubled past lingering.

Spanish banks have been reluctant to open accounts for Cypriot students for several months, citing Cyprus as a high-risk country. This issue isn't isolated to Spanish banks; Cypriot bankers reveal that banks in other EU states, like France, also view Cyprus as high-risk and refrain from opening accounts for Cypriot students.

The challenge, particularly in Spain, isn't primarily economic, as students now have alternative means to manage their finances. Fintech companies, such as Revolut, compete effectively with traditional banking methods. Additionally, Cypriot banks offer apps for parents to transfer money directly to their children's accounts, and options like Apple Pay and Google Pay are available.

These alternatives often prove more cost-effective than transferring funds from Cypriot to Spanish banks.

The underlying issue is fundamentally political. Cyprus's reputation remains tarnished due to questionable political decisions, such as those related to passports. While Cypriot banks have made strides in combating money laundering (AML), other professional groups perpetuate Cyprus's negative image, unfairly affecting individuals unrelated to such matters, like Cypriot students in Spain.

Cyprus frequently garners negative attention in international headlines, often due to revelations about its financial practices. Recent reports, such as the Cyprus Confidential by the International Consortium of Journalists, shed light on Cypriot companies, financial flows through Cyprus, and related controversies, many of which are substantiated.

Previously, Al Jazeera's exposé on the Cyprus Investment Program (CIP) brought significant scrutiny, exposing questionable investments and investors in Cyprus. Reports of Russian oligarchs linked to Cypriot companies and citizenship, and subsequent investigations, further mar Cyprus's reputation.

These events, coupled with international pressure, prompted Cyprus to enact stricter regulations, leading to the closure of numerous shell companies operating on the island.

Efforts to improve Cyprus's image persist, exemplified by ongoing collaborations with Pillsbury Winthrop Shaw Pittman LLP to showcase Cyprus as a clean destination. Despite progress, challenges remain, necessitating continued efforts to restore Cyprus's reputation abroad.

The closure of numerous suspicious accounts and shell companies underscores Cyprus's commitment to enhancing compliance with international standards, as recognized by evaluations like Moneyval's 5th round assessment based on FATF methodology.

[This article was translated from its Greek original]

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