Current status of capital restrictions in Cyprus

A series of temporary capital restrictions measures has been imposed in Cyprus in late March 2013 with the aim to avert the collapse of the banking sector and to safeguard the stability of the Cypriot banking system. The temporary capital restrictions were implemented through decrees issued by the Minister of Finance pursuant to the provisions of the Restrictive Measures on Transactions in case of Emergency Law of 2013.
These decrees are revisited on a regular basis (usually weekly) and they are gradually being lifted upon assessment of the situation. While it was difficult to lift such restrictions from the moment they were introduced, Cyprus has gradually relaxed controls. The most recent decree is the twenty-third (23rd) decree, which was issued on the 22nd of November 2013 and is currently in force. No specific time has been set for lifting the restrictions. Nevertheless, the Minister of Finance has recently announced that all capital controls would be lifted in the first months of 2014 except in the case of transferring money abroad.

New funds from abroad or from other Banking institutions in Cyprus which are indicated as new funds with credit value date 28.3.2013 and after are not subject to any of the restrictions imposed on transfer of funds.

The maximum amount of cash withdrawal cannot exceed €300 daily, per natural person or €500 daily per legal person, in each credit institution or the equivalent of these amounts in foreign currency. Provided that any part of the maximum cash withdrawal allowed daily which is not withdrawn by the beneficiary during the day in which the limit applies, may be withdrawn at any time afterwards.

The following payments are permitted:

  • Cashless payment or transfer of deposits/funds to accounts held in other credit institutions within the Republic up to €15.000 per month per natural person.
  • Cashless payment or transfer of deposits/funds to accounts held in other credit institutions within the Republic up to €75.000 per month per legal person.
  • Cashless payment or transfer of deposits/funds to accounts held in other credit institutions within the Republic for the purchase of goods and or services regardless of the amount provided that the cashless payment from one credit institution to another, for a person’s own account is not permitted and provided that the credit institution may request justifying documents if it is deemed necessary.

Cashless payment or transfer of deposits/funds to accounts held abroad is permitted provided that the transaction falls within the normal business activity of the customer upon presentation of justifying documents as follows:

  • Payment and or transfer of deposits/funds of up to € per transaction, is not subject to the Central Bank Committee’s approval.
  • Payment and or transfer of deposits/funds from €500.001 to €1.000.000 per transaction, is subject to the approval of the Committee.
  • Payment and or transfer of deposits/funds above €1.000.000 per transaction, is subject to the Committee’s approval.

Transfers of deposits/funds outside the Republic up to €5.000 per month, per person are permissible regardless of the purpose and without any justifying document. Payment of salaries of workers abroad can be made upon the presentation of the relevant documentation; In addition, the transfer for living expenses up to €5.000 per quarter for the tuition fees of a person studying abroad is also permitted.

It is prohibited to terminate fixed term deposits prior to their maturity unless the funds are used:

  • To repay a loan and/or overdraft and/or credit card within the same credit institution granted before 27.03.2013.
  • To create one or more fixed term deposits, within the same credit institution, the total amount of which is equal to the initial deposit and for a term at least equal to the initial term of the terminated deposit.
  • To transfer up to €5.000 monthly, from a fixed term deposit in a sight/current account within the same credit institution.
  • To transfer amounts to be solely used for the payment of medical expenses to the medical care provider, provided that justified documents are presented.
  • For a transfer to a sight/current account within the same credit institution, to repay obligations to the Republic.
  • For the payment of real estate acquisition in the Republic provided, inter alia, that the funds are paid directly into a loan account of the seller and the justifying documents are presented to the credit institution.

On the maturity of fixed term deposits, the higher amount between €5.000 or 20% of the total amount of the deposit in question, shall, according to the choice of the depositor, either be transferred to a sight/current account or be deposited in a new fixed term deposit in the same credit institution. For the remaining amount the maturity shall be extended for one month. It should be noted that new fixed term deposit that is created, during or after the entry into force of the Enforcement of Temporary Restrictive Measures on Transactions in case of Emergency Fifteenth Decree, of 2013, with funds from a sight/current account is not subject to the restrictions.

The restrictive measures apply to all accounts, payments and transfers regardless of the currency denomination.
The opening of a new account for any person who is not an existing customer of a credit institution on the date of entry into force of the Enforcement of Temporary Restrictive Measures on Transactions in case of Emergency Sixth Decree of 2013 (11.04.13), is prohibited unless:

  • the account will only be credited with funds transferred from abroad to the Republic, or
  • the prior approval of the Committee is obtained or
  • The account is a new fixed term deposit created with funds from cash provided that the amount to be deposited exceeds €5.000 and the term of the new fixed term deposit is at least 3 months or
  • The account relates to a new loan granted after 2.08.13:
    • Provided that the funds in the current/sight account can only be used for the servicing of the loan and for the regular activity of the customer and not for depositing purposes,
    • Provided further that the credit balance of the current/sight account, cannot at any time exceed the amount of the loan balance,
    • Provided even further that the loan proceeds must be disbursed into a current/sight account, within the same credit institution, within the Republic and shall be subject to the prevailing restrictive measures. The funds in the current/sight account can be deposited in cash or be transferred from an account abroad or from other accounts within the Republic, subject to the prevailing restrictive measures.

Withdrawal of cash using credit or debit or prepaid card issued by foreign institutions on accounts abroad is exempted from the restrictive measures. Moreover, exempted is the cashing of cheques issued on accounts held with foreign institutions abroad and the payments via a debit or credit or prepaid card.

There is no restriction for existing bank customers or new accounts to be credited with new funds transferred from abroad.

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