Cyprus continues to implement a series of temporary capital restrictions measures, with the aim to support the banking sector and safeguard the stability of the Cypriot banking system. The temporary Cyprus restrictive measures 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 monthly) 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-eighth (28th) decree, which was issued on the 28th March 2014 and is currently in force. 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.
A summary of the current status of temporary capital restrictions in the Cyprus banking system is set out below: Cash withdrawals from Cyprus banks are freely allowed. Cashless payments or transfers of deposits/funds to accounts held in other credit institutions within Cyprus are allowed for amounts up to €50.000 per month per natural person. Cashless payments or transfers of deposits/funds to accounts held in other credit institutions within Cyprus are allowed for amounts up to €200.000 per month per legal person.
Cashless payments or transfers of deposits/funds to accounts held in other credit institutions within Cyprus for the purchase of goods and/or services are allowed for unlimited amounts, provided that: the cashless payment from one credit institution to another for a person’s own account is not permitted; and the credit institution may request justifying documents if it is deemed necessary. Cashless payments or transfers of deposits/funds to accounts held abroad is permitted, provided that the transaction falls within the normal business activity of the customer and upon presentation of justifying documents as follows: Payment and/or transfer of deposits/funds of up to €1.000.000 per transaction is not subject to the Central Bank Committee’s approval.
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 Cyprus are allowed for amounts up to €5.000 per month per person, 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.
No restrictions apply on breaking fixed term deposits prior to their maturity. 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 new fixed term deposit cannot be terminated prior to its maturity; or The account relates to a new loan granted after the entry into force of the Enforcement of Temporary Restrictive Measures on Transactions in case of Emergency Nineteenth Decree of 2013: Provided that the opening of a current/sight account related to the new loan is permitted and 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 Cyprus 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.