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Who will be caught by storm in Cyprus tax haven? «Fontanka.ru», 4 June 2018

Cyprus Central Bank decided to make a 90-day pause to consider what to do with the Russian money kept in local banks. Businesspeople are advised to reorient to Asia and Middle East by lawyers specializing in international affairs. 

Petersburg businesspeople are bothered by the last news from Cyprus where financial authorities are beginning to close accounts of the offshore companies on a massive scale. All entrepreneurs who fail to prove their financial innocence will be affected. "Fontanka" has found out that they have 90 days to decide where to rehide their assets. 

Late in the Friday evening RBC reported with reference to the specialist in international financial law, partner of the legal company Paragon Advice Group Alexander Zakharov, that the Cyprus Central Bank had started to close accounts of the offshore companies under pressure from the American partners. Those whose presence in the Cyprus economy is nominal, i. e. is not supported by any assets, will be mostly affected by repressions. 

Information about recommendations of the Cyprus regulator to transfer assets of the Russians to the Russian Commercial Bank (RCB Bank) which is co-owned by the FTB, appeared a few days before. However, the RCB Bank refuted this information in a statement saying that restrictions concern not only the Russian clients. "The demand that an account must be closed is received by everyone who does not meet the requirements of the Cyprus compliance control", - says the statement of the bank. 

Threat to transitional purses 

Most of the Petersburg businesspeople interviewed by "Fontanka" refused to comment on the situation with blocking accounts. It is clear that nobody is eager to to make public their tax havens. 

Advocate, Pen & Paper partner Anton Imennov thinks that transitional "companies-purses" will be the first to receive a serious blow. "It would be interesting to know that long- and short-term agreements on rendering services, supplying production or goods, and also debit and credit debts are not considered to be the assets accepted by the Cyprus banks", - warns the expert. 

However, according to managing partner of the legal company Maxima Legal Maxim Avrashkov, entrepreneurs have some time for maneuvering. The company inquired about the opinion of its partners in Cyprus and found out that the situation there is more quiet, than it is described by the Russian mass media. "We have information that at present there is no real threat that accounts are going to be blocked. Our partners inform us that the Cyprus Central Bank takes a 90-day term for monitoring, therefore, it will be possible to speak about regulator's actions and consequences for the Russian business only in three months' time", - supposes Maxim Avrashkov. 

From Europe to Asia

Lawyers specializing in international affairs point out that popularity of Cyprus as a tax haven has been decreasing for years. "The rate of taxation is not the lowest one, giving account is necessary, information about corporate management is in public domain. If the banking system of Cyprus falls, nobody will impede to carry out another "cutting  of deposits", - names possible risks Anton Imennov.

Anton Imennov considers the Middle East and Asia the safest and most comfortable alternative jurisdictions for businesspeople. "In terms of development of the law and order and banking system Hong-Kong, Singapore and the UAE are most likely to become the  best replacements for Cyprus. There is a supposition that some oligarchs are going to move part of their assets to Russia, though it won't happen instantly", - concludes the advocate. 

Maxim Avrashkov agrees with his colleague and adds that Estonian banks still remain loyal to the Russian capital, while the market of Latvia is already closed: international sanctions imposed against Russia made Latvian banks break their relations with the under-sanction companies. 

Experts interviewed by "Fontanka" agree that the shutdown of such a tax haven as Cyprus is not critical to the Russian business. Processes similar to those happening in Cyprus now can be observed in many European jurisdictions, and business have learnt how to cope with them. "That is critical rather to Cyprus itself. A breach of trust of the Russian businesspeople will be a hard blow to the country positioning itself as the offshore zone of high respectability, not only in financial sphere, but to its reputation as well", - says Anton Imennov.

"Actions of the Cyprus Central Bank can be predicted taking into account a recent visit of the representatives from the US Ministry of Finance. Will such actions cause increase of transparency of the Russian business? It's difficult to say. It seems that part of the capital is really coming to the surface, while the other one is plunging deeper. At present companies running "grey" and "black" business are under permanent pressure both in Russia and Europe. They have entered a period of hard times", - sums up Maxim Avrashkov. 

There are not very many Russian clients left in the local banks. The Cyprus information source "Filifteros" reports that the share of the Russian clients among the clients of the biggest credit organization the Bank of Cyprus has decreased by 60% since the beginning of 2014; deposits from Russia and Ukrain are equal only to 8.3% of the total volume of deposits in the bank. 

Anna Nevskaya, «Fontanka.ru»