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elephants go , one could argue that it is not in the top quartile . Over the past two decades , Cyprus has served as a popular destination for both Russian tourism and investment . The sanctions that followed the Russian invasion of Ukraine took a toll on local activity , but less so on the funds industry than elsewhere . At the CIFA AGM , CySEC vicechairman George Karatzias briefly addressed the war in Ukraine and its effects on Cyprus , particularly after the imposition of sanctions on Russia . “ The commission is in close cooperation with the Finance Ministry , as well as other local and European authorities , taking all necessary measures , in order to ensure the smooth operation of the capital market in Cyprus and the in 2018 , US regulators started to go after illegal Russian money circulating in the international marketplaces . As part of the initiative , the Central Bank of Cyprus closed thousands of shell companies , demonstrating a strong government willingness to alter the country ’ s business model .” He adds that the Central Bank of Cyprus has no reserves held by the Russian Central Bank abroad . “ The country has amazing potential ,” says Kulkarni . Pivot has established a Cyprus operation , which in addition to advising on local developments facilitates the growing connections between the Cypriot and Indian investment firms and their service providers .
“ For years , Cyprus built an economy which was largely grounded on Russian tourists and Russian investors , but in the last decade , and especially following the financial sector collapse during 2013 , Cyprus has gone a long way to unravel deep links with Russian financiers .”
PANAGIOTIS PAPAPETROU , REGIONAL INDUSTRY EXPERT a significant presence on the island – some of them establishing amongst their largest European offices here ." From a regulatory perspective , the separate requirements of a robust fund administration regime are about to be recognised in the jurisdiction . In June 2021 , CySEC released a consultation paper on a proposed draft law to cover this segment of the market and legislation is expected to be enacted in the near future .
The Russian connection There is an elephant in the room , but as
European Union ,” Karatzias said . “ According to information available to the commission , sanctions have affected a number of supervised entities and , depending on the case , we provide guidance or supervisory action ,” he added . Nevertheless , barring one or two specific actions such as the transfer in ownership of VTB Bank to local shareholders , the fallout for the funds industry would seem to be limited . “ There was a lot of Russian money in the economy , but the geopolitics has changed ,” says Viraj Kulkarni , founder of Mumbai-based Pivot , a capital markets consulting group with specific expertise in securities services . “ For years , Cyprus built an economy which was largely grounded on Russian tourists and Russian investors , but in the last decade , and especially following the financial sector collapse during 2013 , Cyprus has gone a long way to unravel deep links with Russian financiers ,” says Papapetrou . “ Moreover
“ As they have progressively loosened links with the Russians , they have at the same time successfully managed to build relations with other major countries , like India , a fellow Commonwealth country ,” Papapetrou confirms . This link has been given a boost by the recent decision by India ’ s Ministry of Finance to classify Cyprus as a ‘ Category I ’ country subject to lighter KYC requirements and enhanced trading limits . Part of its success to date is the result of close cooperation among stakeholders on the island . CIFA has a strong working relationship with Invest Cyprus , the Cyprus Investment Promotion Agency ( CIPA ), as well as strong collaboration with the regulatory authorities , related industry associations and professional associations . Whether as a fund domicile , asset management centre in its own right or as a service centre for other capital markets , Cyprus would seem to have plenty of room to grow .
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