In Cyprus, the accounts of Russians are frozen. How to save money?

Following the Baltics , Russian money is at risk in Cyprus, another popular haven for opening foreign accounts. Cypriot banks were ordered to tighten control over the accounts of individuals and offshore companies, as well as deal with the beneficiaries of the latter. The Bell asked lawyers what to do in such a situation for account holders in Cypriot banks.

Details

• In May, it became known that after the visit of officials from the US Treasury to the island, Cypriot regulators began to tighten control over the accounts of offshore companies.
• Around the same time, commercial banks received a circular from the Central Bank of Cyprus with a detailed list of increased requirements for accounts of individuals, offshore and Cypriot companies - both already opened and new (we wrote about this in detail here ).
• Based on this document, banks compiled their lists of suspicious accounts and demanded additional documents from those who opened them. Some accounts have been frozen until the circumstances are clarified, but there is no exact data on their number (the Central Bank of Cyprus did not respond to The Bell's request at the time of publication). The Cypriot scheme is similar to the Latvian one, lawyers say: the account is frozen and they are required to provide a list of documents that is obviously unrealistic for an offshore.
• Further, according to the experience of the Baltic states, two scenarios are possible, says the general director of Emkvarta. Personal Advisor» Natalia Smirnova. The first is that the account holder does not provide anything, or his documents do not satisfy the bank. Then the bank requires a limited time to withdraw money. At the same time, he, as a rule, withholds a commission of € 500-1000 for having carried out an in-depth analysis. The second scenario - the bank agrees to work with the account, but requires it to be re-registered to an individual, if it is opened offshore, or to a company that conducts real economic activity. Here the choice is up to the owner.

Regardless of whether your account in Cyprus has been frozen or not, there are three ways to proceed:

1. Stay in Cyprus

This is reasonable only if it is fundamentally important for you to leave funds in Cyprus: for example, you really do your business on the island, or you live permanently, says Smirnova.

• Even if the account has not yet been frozen, start collecting documents on the origin of funds as soon as possible - they will almost certainly be required and it is good if they are at hand. “For some of my clients, freezing is critical. Here is a real example: children are studying at the university, they urgently need to pay for the semester, and access to the account is blocked, ”a financial consultant working with clients from Russia in Cyprus complains in a conversation with The Bell.
• According to two Russian lawyers who help clients open and maintain accounts in Cyprus, banks are determined to meet the needs of clients and look for a way to legitimize already opened accounts - especially after a noticeable panic began among the Russians, on whom the local banking system is actually based.

2. Move to another jurisdiction

If it is not critical for you to keep money in Cyprus, you should think about moving to another jurisdiction, many of the experts interviewed by The Bell agree.

• But in no case should you rush to transfer money from offshore accounts to your personal and, moreover, to other people's accounts - this is a mistake that is often made in a panic. This will only complicate life - you still have to prove the origin of the funds in a new place, and the transfer from the Cyprus offshore will only complicate the task. In addition, there is a chance to fly into tax penalties.
• It is better to open an account for the same offshore company, but in a different jurisdiction, Smirnova advises. She suggests paying attention to less popular countries than Cyprus - Liechtenstein, Singapore, Hong Kong and the UAE. Transferring money to Southeast Asia, which is less prone to political risks and is not associated with “Russian money,” Dmitry Zapol, a partner at IFS Consultants, also considers it a reasonable step.
• With European jurisdictions, it is more difficult, even with Liechtenstein, which is familiar and more loyal than most European countries. “If you could not prove the origin of the funds in Cyprus, you will not be able to do this anywhere in Europe,” says the international financial consultant FCP Financial Management Ltd. Isaac Baker.
• If you leave Cyprus, it is better to go to jurisdictions with which you really have something in common: having a residence permit, real estate or business, warns Paragon Advice Group partner Alexander Zakharov. Otherwise, the escape will only delay the problems, but will not solve them.
• We must be prepared for the fact that it will not work to transfer money to an account in a new jurisdiction “right tomorrow”. In the same Liechtenstein, according to Smirnova, it will take about a month to open an account. A little less if there are letters of recommendation from large banks. The translation itself will take a few more days.
• The price of a transfer to another offshore is a percentage of the transfer amount, but, as a rule, no more than €100-200. If you withdraw money yourself, until the account is frozen, the Cypriot bank is unlikely to take a commission at all. If after that, it can keep €500-1000.

3. Return to Russia

Returning money under the new capital amnesty is a good option for those who are ready to tell the Russian tax authorities about their foreign assets, said lawyers interviewed by The Bell . So far, the amnesty looks quite safe: the information specified in the special declaration that you must submit as part of the amnesty cannot serve as a basis for initiating criminal, administrative and tax cases against the declarant or nominal owner. Such information cannot be used even as evidence.

Lawyers said that during the last amnesty they did not encounter violations of these guarantees. You can not guarantee that the rules of the game will not change later, Becker believes. But after going through the amnesty in Russia, it will be much easier for you to open accounts in Europe, says Zakharov.

What do I get from this?

The advice may differ, but all the interlocutors of The Bell are unanimous: after the Baltics and Cyprus, other offshore companies will follow - although not all at once, and for some time it will be possible to move from one jurisdiction to another. As a last resort, this might work. But the situation in Cyprus is another reason to think about how to deal with money in general. It is worthwhile to figure out if you can prove their origin, if necessary, and start collecting the necessary documents.

Anastasia Stogney