It's true that the majority of these accounts are from foreign people, but that doesn't mean there is anything illegal with putting your money on a Cyprus bank account. Please note that Cyprus is part of the EU for a long time, and this way of tax avoiding (not evasion) is completely legal.

As of December 2012 62% of deposits in Cyprus were by domestic residents. Removing the €5,3 billion in non-Cypriot euro-deposits and we find about 31% of the mostly Russian and British deposits [1]. The political problem were the foreign deposits. The financial problem were 2011 foreign deposits at 82% of GDP, total deposits 2011 nearly 3x GDP, and bank assets 5-7x GDP.

[1] http://www.centralbank.gov.cy/media/xls/2nd_MFS_January_2013...

A lot of the British deposits were made by the UK MOD in order to pay staff at the two British airbases in Cyprus. Understandably, many of these staff had deposits in local banks.

Oops, I updated my post. Meant to say avoidance instead of evasion.

Being legal doesn't change my sentiment.

It's not any less technically legal for the E.C.B. to levy those bank accounts.

Cyprus's banks are more than just dumps for dirty Russian money. is a banking hub for a variety of entities who want to do business with Europe. They help western Europe and Russia (and, more recently, emerging markets) invest in each other, get stocks listed on each others' exchanges, comply with the applicable financial regulations, and things like that. They do lots of "financial services" and consulting.

Or they did, anyway.

Wikipedia: "As a result of the reforms in the past decade Cyprus has developed into one of the world's more important international business centers. In the years following perestroika it gained great popularity as a portal for investment from the West into Russia and Central and Eastern Europe."

And then they used their expertise to buy Greece debt.