UNOFFICIAL
TRANSLATION
Sixteenth
decree of the Enforcement of Restrictive Measures
on
Transactions of Foreign Banks
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Decree
as per articles 4 and 5
WHEREAS
there is
lack of substantial liquidity
and significant risk of deposits
outflow with possible outcome the risk of the viability of
the credit institutions with chain
effects that could lead to instability of the financial system and have destabilizing consequences on the economy and society of the country as a whole,
AND WHEREAS under these circumstances an emergency situation is created that justifies the enforcement of temporary restrictive measures on transactions in order to safeguard financial stability,
AND
WHEREAS under these circumstances it is not necessary to impose the same
restrictive measures on all credit institutions
For safeguarding public order and public
security and for overriding
reasons of public interest,
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12(Ι) of 2013
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The Minister of Finance
in exercising the powers granted to him by sections 4 and 5 of the Enforcement
of Restrictive Measures on Transactions in case of Emergency Law of 2013,
following a recommendation and the consent of the Governor of the Central
Bank, issues the following Decree:
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Short title.
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1. The present Decree shall be cited as the Enforcement
of Temporary Restrictive Measures on Transactions of Foreign Banks in case of
Emergency Sixteenth Decree, of 2014.
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Interpretation
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2. (1) In the present Decree, unless a
different meaning results from the context-
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“international
customer” means a customer of a credit institution that is included in the catalogue,
who is:
(a) non
resident of Cyprus as defined in the Directive of the Central Bank of Cyprus
for the definition of the word “resident of Cyprus” for statistical purposes,
issued on 27 June 2008 under the Central Bank of Cyprus Laws of 2002 to 2007
or
(b)
a corporation, trust, partnership or legal entity,
whereby 100% of the ultimate beneficial owners thereof are non resident
natural persons or a company listed on a recognised exchange ,outside the Republic, as defined in the Directive for the calculation of the
capital requirements and large exposures of banks of 2006 to (No.2) of 2011. Provided
that any such company is not listed on the Cyprus Stock Exchange or
(c)
a corporation, trust, partnership or legal entity, whereby
more than 90% of the ultimate beneficial owners thereof are non resident
natural persons and the rest 10% of the ultimate beneficial owners that are
resident natural persons are not citizens of Cyprus:
Provided
that the Committee’s approval has
been obtained prior to the inclusion of such a customer in the list of
international customers∙ ∙
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“domestic
customer” means a customer of a credit institution in the Republic other than
an international customer∙
“compliance
officer” means the compliance officer as defined in section 69 of the the
Prevention and Suppression of Money Laundering Activities Law∙
«Law» means
The Enforcement of Restrictive Measures on Transactions in case of Emergency
Law of 2013.
(2) Terms not otherwise defined
in this Decree shall have the meaning ascribed to them by the Law.
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66(Ι) of 1997
74(Ι) of 1999
94(Ι) of 2000
119(Ι)
of 2003
4(Ι) of
2004
151(Ι)
of 2004
231(Ι)
of 2004
235(Ι)
of 2004
20(Ι) of 2005
80(Ι) of 2008
100(Ι)
of 2009
123(Ι)
of 2009
27(Ι)
of 2011
104(Ι)
of 2011
107(Ι)
of 2012
14(Ι)
of 2013
87(Ι)
of 2013
102(Ι) of 2013
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3. (1) A credit institution
that satisfies the conditions of this paragraph may apply to the Central Bank
requesting its inclusion in the catalogue of credit institutions set out in
the Annex of this Decree.
A credit Institution is only included in the catalogue set in the Annex
of this Decree
provided
that the Governor is satisfied that all of the following conditions are met:
a.
The credit institution is a branch or a more than
50% subsidiary of a foreign bank.
b.
The credit institution for the purpose of giving
effect to this Decree internally splits into two operations: one dealing with
international customers and the other with domestic customers.
c. In
the case of a subsidiary of a foreign bank:
i.
A letter of comfort is provided to the Central Bank
of Cyprus from the parent bank of the credit institution confirming that it will
always support the liquidity position of the subsidiary in the Republic so
that the subsidiary in the Republic will not request Emergency Liquidity
Assistance from the Central Bank of Cyprus or liquidity from Eurosystem
credit operations.
ii.
A standby credit facility is provided to the
subsidiary by the parent bank for an amount of at least equal to 30% of
customer deposits.
iii.
The ratio of liquid assets, as liquid assets are
defined in the Directive to Banks on
the Computation of Prudential Liquidity in all currencies (Revised November
2010), to total customer deposits will not be lower than 60%.
With respect
to liened (blocked funds) held as collateral for credit facilities granted,
the lower between the liened (blocked) funds and outstanding credit facility
balance shall be excluded from the total customer deposits mentioned in (ii)
and (iii).
d.
A list of the
international customers is submitted to the Central Bank of Cyprus in a
standardised electronic template in a format specified by the
Central Bank of Cyprus with written confirmation from the Compliance
Officer of the credit institution that all the persons included in the list
of international customers are international customers as defined in
paragraph 2 of this Decree.
e.
The Central Bank of
Cyprus, if it deems necessary, may request the External Auditors of the
credit institution to confirm in writing that the credit institution meets
all the conditions of this section.
(2)
The Compliance Officer of a credit institution that is included in the
catalogue shall
regularly monitor compliance with the conditions of this section and report
any change immediately to the Central Bank of Cyprus.
(3)
New international customers may be added on the list of international
customers submitted to the Central Bank of Cyprus under paragraph 3(d).
Provided that the credit institution
shall immediately notify the Central Bank of Cyprus of any changes to the
list of international customers submitted to the Central Bank of Cyprus under
paragraph 3(d) and submit to the Central Bank of Cyprus the new list of
international customers with written confirmation from the Compliance Officer
of the credit institution that is included in the catalogue, that all
the persons in the list of international customers are international
customers as defined in paragraph 2 of this Decree. Whereas the new list of
international customers replaces the old list and enters into force
immediately after confirmation of the Central Bank of Cyprus about the
receipt of the list.
Provided that the Central Bank of
Cyprus may, if it deems necessary, request additional confirmation from the
External Auditors of the credit institution.
(6) The
Compliance Officer of the credit institution that is included in the
catalogue shall
electronically report the credit institution’s transactions weekly to the Central
Bank of Cyprus.
(5)
A credit institution shall remain in the catalogue set
in the Annex of this Decree provided that all the conditions of this section
are continuously met. The Central Bank of Cyprus shall control/monitor
the implementation of this condition and proceeds to a relevant
recommendation to the Minister on any necessary revision of the said
catalogue.
4. By virtue of sections
4 and 5 of the Law, following a recommendation by the Governor and with the
consent of the Governor, the following restrictive measures are imposed on credit
institutions that are included in the catalogue which is set in the Annex of
this Decree:
(a)
All
cashless payments or transfers of deposits/funds from a credit institution
that is not included in the above mentioned catalogue to an international
customer of a credit institution included in the catalogue or to such a
credit institution’s own account are considered as cashless payments or
transfers of deposits/funds to accounts held abroad and are subject to the provisions
of any other Decree issued under the Law.
(b)
All
cashless payments or transfers of deposits/funds from a domestic customer to
an international customer of a credit institution included in the catalogue
or to such a credit institution’s own account are considered as cashless
payments or transfers of deposits/funds to accounts held abroad and are
subject to the provisions of any other Decree issued under the Law.
(c)
All
cashless payments or transfers of deposits/funds from a credit
institution that is included in the above mentioned catalogue, for its own account or
by the order of an international customer, are permitted and are not subject
to any restrictive measure imposed under any other Decree issued under the Law.
(d)
All
transactions between a credit institution that is included in the catalogue and an international customer are
permitted and are not subject to any restrictive measure imposed under any
other Decree issued under the Law.
(e)
All
transactions between international customers are permitted and are not
subject to any restrictive measure imposed under any other Decree issued
under the Law.
(f)
All
transactions between a credit institution that is included in the above
mentioned catalogue,
by the order of an international customer or for their own account, and an
entity outside the Republic are permitted and are not subject to any
restrictive measure imposed under any other Decree issued under the Law.
(g)
A credit institution that is included in the above
mentioned catalogue
is prohibited from:
i.
servicing
a domestic customer or its related parties as defined in article 11(3) of the
Business of Credit Institutions Laws of 1997 to (No. 3) of 2013 that maintain
an account with its Head Office and or
ii.
opening
of a new account and or soliciting and obtaining business from a domestic
customer who was not an existing customer of the said
credit institution on the date of entry into force of the
Enforcement of Temporary Restrictive Measures on Transactions of Foreign
Banks in case of Emergency First Decree, of 2013 unless the new account
relates to a new loan granted after the entry into force of the present
Decree and provided that the loan is not funded from customer deposits:
Provided
that the opening of a current/sight account related to the new loan is
permitted and the funds in the account can only be used for the servicing of
the loan and for the regular activity of the client and not for depositing
purposes:
Provided
further that the credit balance of the current/sight account, cannot at
anytime 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 restrictive measures imposed to current/sight accounts under
any other Decree issued under the Law.
The
funds in the sight/current 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.
(h)
All
domestic customers are also subject to the restrictive measures imposed by
any other Decree issued under the Law.
Provided
that all permissions relating to an international customer are applicable
only if accounts of international customers, since the entry into force of the
Enforcement of Temporary Restrictive Measures on Transactions in case of
Emergency First Decree, of 2013 and until the date the credit
institution is included in the above mentioned catalogue, have
not been credited with funds from accounts of domestic customers and with funds
from domestic banks.
Provided further that
in the case that funds from accounts of domestic customers and funds from
domestic banks have been credited into the account of an international
customer, since the
entry into force of the Enforcement of Temporary Restrictive Measures on
Transactions in case of Emergency First Decree, of 2013 and until the date the
credit institution is included in the above mentioned catalogue, these funds shall be
subject to the provisions of any other Decree issued under the Law.
5-(1) The Enforcement of Temporary
Restrictive Measures on Transactions of Foreign Banks in case of Emergency Fifteenth
Decree, of 2013 is repealed.
(2) The repeal of the Decree referred to in subparagraph (1) does not-
(a) restore anything
that is not in force or does
not exist at the time of repeal,
and
(b) affect
the previous validity of
the repealed Decree or anything
that took place normally
or allowed by virtue of the said Decree, and
(c) affect a right,
a privilege, an obligation or a responsibility
that is derives from the repealed Decree,
and
(d) affect penalty,
forfeiture or punishment incurred
for an offense committed
in violation of the repealed Decree,
and
(e) affect an investigation,
a legal proceeding or remedy related to any right, privilege, obligation, liability, penalty, forfeiture or punishment as
mentioned above,
and such investigation,
legal proceeding or remedy that can arise, continued or executed, and such
penalty, forfeiture or punishment
can be imposed as if the said Decree is
not repealed.
6. This Decree shall
apply for a twenty one day period starting on the 20th of January 2014.
Harris Georgiades
Minister of Finance
17th January 2014.
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APPENDIX
[Paragraph
3(1) and (5) and paragraph 4]
CATALOGUE
OF CREDIT INSTITUTIONS
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1.
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Arab Jordan Investment Bank SA
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2.
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Bank of Beirut SAL
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3.
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BankMed SAL
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4.
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Banque BEMO SAL
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5.
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Banque SBA
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6.
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Barclays Bank PLC
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7.
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BBAC SAL
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8.
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BLOM
Bank SAL
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9.
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Byblos
Bank SAL
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10.
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Credit
Libanais SAL
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11.
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Jordan Ahli Bank plc
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12.
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Lebanon and Gulf Bank SAL
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13.
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OJSC
Promsvyazbank
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14.
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Open
joint-stock company AvtoVAZbank
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15.
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Privatbank
Commercial Bank
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16.
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Russian Commercial Bank (Cyprus) Ltd.
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