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    Brexit can jeopardize DGS payouts to UK accounts

    Both camps in the UK try to convince their followers to vote for or against leaving the EU. The big picture discusses the long term future of the country and although everyone is free to make his own decision, the payout of FBME funds via the Deposit Guarantee Scheme can be put at risk.

    The Deposit Guarantee scheme (DGS) in Cyprus and the current situation with FBME Bank also referred to as Deposit Protection Scheme is an external insurance guarantee. This separate entity is controlled by the central bank but has its own legal status to prevent misunderstandings.

    The European Commission wrote EU directive 2014/49/EU for the memberstates of the EU. These memberstates can implement the workings of a DGS to protect customer deposits up to 100.000 Euro. Since the directive is based on the European situation, it is implemented by the member states of the European Union.

    As we’ve seen in the past – Banca Privada d’Andorra and more recent FBME Bank Cyprus – the central banks only allow payout to accounts in one of the 28 member states of the European Union. It looks like this is not going to change. Therefore FBME customers should choose wise when opening a (second) bank account to receive the DGS payout funds.

    It is inevitably that a Brexit has an effect on al EU policies, rules and regulations. Central banks in the EU will most probably not accept UK bank accounts for DGS payouts. Not to tease the Brits but because they simply follow the agreements made by the EC directives.

    For more information on the FBME Deposit Protection Scheme, you can find the directives and further guidelines on the websites of the European Commision and Central Bank of Cyprus.

    This information is not intended as political advice or a position in Brexit. It’s just another way to be prepared for things that might happen. We’ve seen too much uncertainty already during the two years FBME Bank was closed. You can better be safe than sorry.

    Contact:

    LEGAL FLORIS LLC – 5783431

    Telephone:
    001 646 513 2855 – USA
    00371 678 81974 – Latvia
    00357 25 057 544 – Cyprus
    00352 20 301970 – Luxembourg

    E-mail:
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    Registered office:
    1013 Centre Rd. Suite 403-A
    Wilmington, 19805
    Delaware – USA

    Cyprus office:
    Kitiou Kyprianou street 31
    3036 Limassol – Cyprus

    Postal address:
    PO Box 50472
    3605 Limassol – Cyprus

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