Translated material
Text of the directive of the Ministry of Finance of Cyprus on the rules of operation of banks
The Cyprus magazine "Successful Business" published in Russian the full text of the directive of the Ministry of Finance of Cyprus on the work of banking institutions over the next week.
Temporary restrictions on money transfers and cash transactions
Rules
As a result of the significant reduction in liquidity in Cyprus and the risk of cash outflows from bank accounts, the Ministry of Finance of the Republic of Cyprus, following the recommendations of the Governor of the Central Bank of the Republic of Cyprus, has prepared a package of temporary restrictions regarding banking and cash transactions, namely:
(a) The maximum cash withdrawal amount shall not exceed EUR 300 per day (or foreign currency equivalent) in respect of each person in each credit institution. The total amount of cash withdrawn from all accounts (mainly withdrawals from debit and prepaid cards, withdrawals from credit institutions, and withdrawals from credit cards applied to current accounts) of a given individual persons in each credit institution will be summed up. If the limit for cash withdrawal, which is set for each day, has not been reached by the person during the day, then he has the right to withdraw funds within the remaining limit at a subsequent time.
(b) Checks cannot be exchanged for cash.
(c) Non-cash payments or transfers from deposits/funds to accounts abroad or with other credit institutions are prohibited, except in the following cases:
— Payments for transactions carried out as part of normal business activities, confirmed by relevant documents:
— Payments of up to 5,000 euros per day can be made without restrictions;
— Payments ranging from €5,001 to €200,000 are subject to approval by the Committee. A list of requests for payments within this category must be sent to the Committee of the relevant credit institution on a daily basis, indicating the amounts of each payment and the total amount of payments, as well as the number of payments within this category. The committee, which must make a decision within 24 hours, must take into account the availability of the necessary available liquidity in the credit institution;
— Payments in the amount of more than 200,000 euros, given that the approval of the Committee was obtained taking into account the liquidity situation in the credit institution.
— Payment of wages to employees, subject to supporting documents.
— Housing rental expenses of up to 5,000 euros per quarter and educational expenses for relatives up to the first degree of kinship studying abroad must be supported by relevant documents. Payment for training should be made only in favor of the actual recipient if appropriate supporting documents are available.
– Payments or money transfers outside the Republic of Cyprus using debit cards, credit cards or prepaid cards up to €5,000 per month per person from each bank.
(d) Early termination of term deposit accounts is prohibited, except in cases where these funds are necessary to repay a loan issued by a given credit institution.
(e) Upon expiration of the bank deposit, EUR 5,000 or 10% of the total amount (the greater of the two amounts), at the request of the account holder, must be transferred to the current bank account or a new time deposit must be opened with this amount at the given credit institution. For the remaining amount, the period for its return is extended by one month.
(f) Funds transferred from deposits to checking accounts are subject to the restrictions that apply to checking accounts.
(g) Persons traveling abroad may carry cash in euros or other currencies up to an amount not exceeding 1,000 euros (or foreign currency equivalent) in respect of each trip abroad.
(h) Financial transactions, payments and other transfers that were not completed prior to the entry into force of these measures must also comply with the new rules. Those financial transactions, payments or transfers that were not authorized by the credit institution before these rules came into force must be canceled and initiated again.
(i) Restrictions apply to all accounts opened with credit institutions, payments and money transfers, regardless of currency. Restrictions do not apply in the following situations:
— Money transfers from abroad to the Republic of Cyprus;
— Withdrawal of funds from debit or credit cards issued by foreign credit institutions in relation to accounts opened abroad;
— Payment of funds by checks issued on accounts opened with foreign credit institutions abroad;
— Withdrawal of cash from the accounts of credit institutions at the Central Bank of Cyprus;
— Diplomatic missions are the parties to the settlements;
— The party to the settlement is the Republic of Cyprus;
— The party to the settlements is the Central Bank of the Republic of Cyprus.
These measures will be in effect for seven days, starting March 27, 2013.
Transactions carried out through Cyprus Popular Bank and Bank of Cyprus
Cyprus Popular Bank
— All accounts opened with the bank (including current accounts, accounts with advance notice and accounts opened for a specific period) with a balance exceeding EUR 100,000 are frozen and will be transferred to the “bad” bank. Accounts whose balance does not exceed EUR 100,000 can be used in calculations (subject to the restrictions stated above).
- Funds that were transferred to bank accounts after March 28, 2013 can be used to make payments (subject to the restrictions stated above).
Bank of Cyprus
— All accounts opened with the bank (including current accounts, accounts with advance notice and accounts opened for a specific period) with a balance exceeding EUR 100,000 are frozen until part of them is converted into share capital. Accounts whose balance does not exceed EUR 100,000 can be used in calculations (subject to the restrictions stated above).
- Funds that were transferred to bank accounts after March 28, 2013 can be used to make payments (subject to the restrictions stated above).
Frequently Asked Questions
1. Can funds from checks be deposited into an account with a credit institution?
Funds from checks issued by a credit institution can be deposited into accounts at the same credit institution. For checks issued as part of the normal business activities of a client of a credit institution (for example, payment for services rendered in accordance with an invoice), the provisions of paragraph C (see above) shall apply.
2. Are there any restrictions on advance notice accounts?
No, however, it is likely that credit institutions will not process funds without providing full notice.
3. Can organizations (companies, institutions, etc.) withdraw funds?
Yes, these measures apply to all account holders (individuals and organizations).
4. Can I pay bills at hotels and restaurants abroad using a credit card?
Yes, however, a limit of up to €5,000 per month will apply to each person from each bank.
5. Can I continue to use my checking account to pay off my loan?
Yes, taking into account that the loan was provided by the same credit institution.
6. Can I make money transfers between accounts opened with the same credit institution?
Yes.
7. Can I make money transfers between bank accounts opened with different credit institutions within Cyprus?
No, unless the payments relate to transactions carried out in the ordinary course of business, for which the provisions of paragraph C (above) shall apply.
8. Will current bank accounts be automatically converted to deposits within the current restrictions?
No.
9. Are there any restrictions regarding transfers from abroad?
No, restrictions apply to transfers from the Republic of Cyprus. Funds received from abroad can be used without restrictions in Cyprus and abroad.
10. Can I access my fixed term deposit after it has expired?
Yes, however subject to the restrictions specified in paragraphs E and F.
11. Are there restrictions on the number of money transfers abroad?
No, taking into account that the total amount of the transfer does not exceed the limit and the purpose of these money transfers complies with the Rules.
12. Can I transfer my employees' salaries to accounts opened outside the Republic of Cyprus?
No, except for cases when they carry out their work duties abroad, which is confirmed by relevant documents.
13. Which organizations are covered by these rules?
These measures apply to all banks, cooperatives and other financial institutions operating in Cyprus in accordance with local legislation.
14. How long will these measures apply?
These measures will be in effect for 7 days from March 27, 2013. However, in accordance with the rules, the Ministry of Finance may extend, change or cancel them.
We thank Ernst&Young for the complete translation of the directive from the Ministry of Finance of Cyprus.