NICOSIA, Cyprus (AP) — Cyprus banks have reported a significant reduction in their exposure to risky Russian and Ukrainian businesses following the 2022 invasion of Ukraine by Russia. In the year after the invasion, Cyprus banks saw a decrease of more than 13,000 clients and 35,000 accounts, totaling 2 billion euros ($2.17 billion), as they complied with sanctions imposed by the U.N., the European Union, the U.S., and Britain on Russia.
Official figures reveal that the number of Russian clients utilizing Cypriot banks dropped by almost half to 0.35%, while Russian-held deposits decreased from 2.21% to 1.53% during the same period.
Cypriot banks have been working diligently to demonstrate a sustained improvement in their supervisory practices over the past decade. This transformation was prompted by a financial crisis in 2013 that pushed Cyprus to the brink of bankruptcy. The efforts have resulted in a substantial reduction of Russian and Ukrainian clients by 90% and 61% respectively between 2014 and 2023. Deposits from Russian and Ukrainian clients also decreased by 83% and 71% over the same period.
Overall, Cypriot banks terminated business relationships with over 72,000 clients and closed nearly 161,000 accounts between 2014 and 2023, amounting to almost 42 billion euros ($45.5 billion).
Representing the Association of Cypriot Banks, the chief compliance officer of the Bank of Cyprus highlighted that Cypriot banks are among the few globally that rigorously enforce trade restrictions on goods with both civilian and military applications. The official noted that there are more than 15 countries friendly to Russia that Moscow could potentially use to circumvent sanctions.
Following the imposition of restrictions on 'dual use' goods, trade turnover between such countries plummeted from 16.5 billion euros ($17.9 billion) in 2014 to just 3.8 billion euros ($4.1 billion) in 2023.
Cypriot banking officials emphasized that all bank clients, payments, and deposits are screened daily against U.S., U.K., EU, and U.N. sanctions lists. Additionally, any business dealings involving close family members or associates of sanctioned individuals are promptly terminated.
