The volume of deposits in Cypriot banks held by non-EU citizens — mostly Russians — has dropped to an all-time low as a result of the government’s stricter anti-money laundering measures, according to figures released by the Central Bank of Cyprus on Wednesday.
Data for May showed that third-country deposits dropped to 6.851 billion euros (7.730 billion U.S. dollars) from 7.9 billion euros a year before — a difference of almost 1.05 billion euros.
The reduction since 2012 — the year before the economic crisis that had led to the resolution of the banking system and the conversion of 47.5 percent of deposits exceeding 100,000 euros into equity to recapitalize the troubled Bank of Cyprus — was even more marked.
The volume of deposits held by Russian citizens fell from 21.518 billion euros at the end of December 2012 by 14.666 billion euros at the end of May this year — a drop of 68 percent.
The volume of Russian-held deposits at the end of 2012 was almost equal to Cyprus’s annual economic output and represented 30.6 percent of all deposits.
At the end of May this year, Russian-held deposits equalled less than 30 percent of the country’s annual economic output and represented just 14.13 percent of all deposits of 48.438 billion euros.
Responding to pressure from the European Union and the United States, in 2018 the Cypriot authorities started to introduce strict anti-money laundering measures, which the banks are applying with due diligence. These require depositors to declare the source of the money and to follow strict and lengthy procedures.
These have led to delays in the completion of procedures that forced legitimate depositors to look for other countries for the safekeeping of their money, causing concern to the new Governor of the Central Bank, Constantinos Herodotou, who took up his duties in April.
He advised Cypriot lenders to use state-of-the-art digital technology and also find other ways to shorten their investigations as to the origin of the money, so as not to lose customers.