Some things never change in Cyprus. A couple of days ago, at a House committee meeting with all the representatives invited, complained about the obstacles faced by foreign investors. The two main hurdles an investor had to negotiate were inefficient state bureaucracy and the ultra-demanding banking procedures, while the extremely slow-moving justice system also received an honourable mention. These were all deterrents to foreign investment, deputies heard from members of the business community.

The bureaucratic delays have always existed and have defeated all governments that attempted tackling the problem. These attempts started more than 30 years ago during the presidency of George Vassiliou, who being a businessman himself, recognised the value of efficient state services for attracting foreign companies. He was unsuccessful, as were all the governments that followed, despite well-meaning initiatives such as ‘fast-track’ procedures, ‘one-stop shops’ and special advisors. Although a little progress may have been made, after a while the old practices would somehow return.

Since the banking crisis and the advent of KYC (know your customer), the banks have joined the state services in making things extremely difficult for foreign investors. After the exhaustive procedure a company is subjected to for opening a bank account, it subsequently must provide huge numbers of documents and certificates for every transaction it makes. In fairness, Cyprus companies with business abroad are also forced to provide reams of documents including accounts.

 According to representatives of the Cyprus chamber of commerce, Keve, “banking checks on foreign companies in Cyprus are much stricter than in other EU countries.” The Republic has moved from reckless laxness to extreme strictness, or as the employers’ federation put it – excessive bureaucracy in both government offices and banks. The banks, under pressure to clean up their act after the 2013 meltdown, have behaved like tax department inspectors rather than organisations that exist to facilitate the smooth operation of businesses.

Representatives of the shipowners’ association said that while the shipping sector had huge potential, “the banking system remains the main challenge.” Shipping companies could open bank accounts faster in England and Switzerland, deputies were told.

It is obvious that this excessive scrutiny of companies, which goes well beyond the requirements of the law, must be reviewed and re-evaluated by the association of bankers in cooperation with the Central Bank and the finance ministry. We gain nothing from having the strictest banking regulations in Europe and treating bank customers as suspects whose every transaction must be investigated and every detail documented. This is no way to facilitate business.

We do not know if there is any government capable of reducing the red tape and bureaucratic delays or whether the justice system would ever cut the huge backlog of cases and become efficient; digitalisation is also moving at a snail’s pace. Banks, in contrast, are more flexible because they are profit-making organisations that must adapt and change to survive. Easing their KYC and documentation requirements and lowering them to a sensible level must be their objective. Now they have cleaned up their act and are healthy, profitable businesses they must stop being the most bureaucratic banks in Europe. It is bad for business and the economy.