Cyprus Finance Ministry amends capital controls decree, restricts transfers again

The Finance Ministry of Cyprus made its seventh urgent amendment to a decree on capital controls, mandating that only payments of up to €300,000 are allowed, and that bank transfers of that size are prohibited.

The Friday amendment was made following consultation with the Central Bank of Cyprus, and was prompted by the massive capital flows following the April 11 decree that allowed clients to transfer money out of the bank to other financial institutions. Depositors also rushed to split up their accounts in order to avoid the forthcoming levies on large holdings.

As a result, restrictions on cross-bank transfers have been imposed, limiting them to €2,000 for individuals and €10,000 for legal entities. Also, these transfers may now only be made once a month. Furthermore, the ministry stipulated that bank clients may not open new accounts in other financial institutions.

The updated decree, which will be in effect for seven days, also prohibits cross-border transfers. Exceptions include paying wages to employees of foreign companies and covering education costs, and require confirmation documents in each case.

Customers are still only allowed to withdraw €300 a day from ATMs. Those going abroad can take only €2,000 in cash with them, and may only spend up to €5,000 abroad in debit card payments.

The capital controls measures have been temporarily imposed in Cyprus since March 27, in light of the island nation's dire financial circumstances, following nearly two weeks of bank 'holidays.' They came as the country’s government moved to enforce the controversial conditions of a €10-billion bank bailout from the eurozone and the International Monetary Fund.

Anger has mounted in the country since investors learned that bank deposits over €100,000 will see at least 37.5 percent of their value converted into bank shares, which also led to an erosion of confidence in country’s banking system and a danger of mass cross-border transfers by frustrated clients.