Offshore banking in Cyprus is a common choice amongst many individuals and businesses who wish to take advantage of the well established structure that is offered. Cyprus offshore banking is a highly regulated activity and features favorable set up procedures and easy-to-use bank account controls.
The information below provides details about the banking system and on opening a Cyprus offshore bank account.
The banking system comprises of the Central Bank of Cyprus, the domestic commercial banks and branches or subsidiaries of foreign banks. It also encompasses the co-operative credit institutions, which are supervised by the Co-operative Societies’ Supervision and Development Authority. All commercial banking arrangements and practices within Cyprus follow the British model. Local banks have managed to develop strong correspondent networks around the world, thus enabling them to have easy access to the world banking network and being able to carry out both traditional and specialized financial transactions.
The Central Bank of Cyprus, by virtue of the powers conferred upon it by the Central Bank of Cyprus Law, is the licensing authority for the conduct of banking business and for the supervision of banks. The Central Bank of Cyprus has always been guided in its supervisory role by the recommendations of the Basle Committee on Banking Supervision. It also implements the EU Directives on banking regulation while following up new developments very closely, and having its prudential functions under constant review to take account of these developments and changing circumstances. Its main responsibility is to ensure a safe and stable financial system that would preserve public confidence and foster economic stability and growth. This objective is satisfied by maintaining an effective mechanism of bank regulation and supervision.
The specialized financial institutions within Cyprus are the Cyprus Development Bank Ltd, the Housing Finance Corporation and Mortgage Bank of Cyprus Ltd. The Cyprus Development Bank Ltd specializes in the provision of medium and long-term finance for development purposes. It also carries out investment banking operations and provides consulting services to companies. The Housing Finance Corporation provides long-term housing loans mainly to low and middle-income families, while Mortgage Bank of Cyprus Ltd specializes in granting medium and long-term loans for the development of the tourism and manufacturing industries.
Over the years banks have expanded their activities beyond traditional banking and their services include insurance, leasing, hire purchase finance, factoring, mutual fund management, investment and consulting as well as custody and asset management services. They have also developed new products and services through electronic means or electronic access, using alternative distribution channels such as the internet, call centers and so on.
Deposit Protection Scheme
In accordance with the Regulations on the Establishment and Operation of the Deposit Protection Scheme issued under article 34(2) of the Banking Laws of 1997, as subsequently amended, a “Deposit Protection Scheme” has been established and has been in operation since September 2000. The Fund constitutes a separate legal entity and there is a management committee responsible for its administration.
The purpose of the scheme is to provide complete protection to depositors and to pay compensation in the case that a member bank is unable to repay the deposits of its customers.
The scheme covers deposits denominated in euros, or any other currency of a member state of the European Union. Participation is compulsory for all banks licensed by the Central Bank of Cyprus which accept deposits from the general public including their branches operating in the European Union. The Fund’s Management Committee may exempt a specific bank provided that it is covered by an equivalent scheme.
The deposits of the European Union branches operating in Cyprus are covered, in accordance with the relevant directive of the European Union, by the corresponding schemes operating in their country of incorporation. The Deposit Protection Scheme is activated if it is determined that a member bank is unable to repay its deposits, such a determination being made by the Central Bank of Cyprus or the competent supervisory authority of the country where the bank is incorporated (in case the member bank is incorporated in a country other than Cyprus). The Scheme will also be activated by a Court’s decision for the liquidation of the bank.
The level of compensation per depositor under the Scheme equals 90% of the amount of each protected deposit subject to a limit of the equivalent of Euro 20.000 in the currency of the member state of the European Union in which the deposit is denominated. The limit applies to the aggregate of each depositor’s deposits with the bank.
The banks below have an operating license to carry out banking activities in Cyprus:
1. BANKS LISTED ON THE CYPRUS STOCK EXCHANGE
2. SUBSIDIARIES OF FOREIGN BANKS
3. OTHER BANKS
4. COMPANIES LICENSED TO CONDUCT LIMITED BANKING OPERATIONS
Β. BRANCHES OF FOREIGN BANKS
1. BRANCHES OF BANKS OF EUROPEAN UNION COUNTRIES
2. BRANCHES OF BANKS OF COUNTRIES OTHER THAN EUROPEAN UNION
C. REPRESENTATIVE OFFICES
To learn more about the banking system of your choice, or If you have any additional questions regarding Cyprus banking, Contact Us today.