Swiss regulator doesn't plan to curb potential Cyprus fund flows

Switzerland's financial regulator has no plans to impose curbs on possible inflows of money from Cyprus, which is leaking euros even as its banks remain closed.

"Currently, we don't see any special requirements regarding Cyprus or any other country beyond the general rules governing what money Swiss banks are allowed to accept," said Patrick Raaflaub, head of Swiss financial regulator FINMA.

While Cyprus negotiated its EU bailout, large amounts of euros fled in the form of notes from cash machines and exceptional transfers for "humanitarian supplies", medicines and fuel.

Switzerland lies outside the European Union and its franc is perceived as a safe investment,

It is a likely destination for some of the money now leaving the east Mediterranean island, which has emerged as an offshore financial haven for wealthy foreigners, many of them Russians or Britons.

Under pressure from cash-strapped governments cracking down on tax evaders, the Swiss government in December proposed legislation for a "white money strategy" to try to clean up the country's image as a haven for untaxed assets.

FINMA's Raaflaub said events in Cyprus were not as clear-cut as the Arab Spring, during which Switzerland blocked nearly one billion Swiss francs ($1.06 billion) in stolen assets linked to dictators in four countries at the center of the uprisings - Egypt, Libya, Syria and Tunisia.

"Sometimes there are events like the Arab Spring where we remind banks of to comply with PEP (politically exposed persons) rules. I don't want to rule anything out, but currently, we expect all flows of money to be evaluated to prevent further risks arising," Raaflaub told journalists.

No one knows exactly how much money has left Cyprus or where it has gone. The two banks at the center of the crisis - Cyprus Popular Bank and Bank of Cyprus - have subsidiaries in London that have remained open and placed no limits on withdrawals.

Ordinary banks accounts in Cyprus are subject to central bank capital controls to prevent a run on deposits. Little is known about those measures, beyond assurances from President Nicos Anastasiades that they represent "a very temporary measure that will gradually be relaxed.

Late on Monday, the central bank of Cyprus reversed a decision to start reopening at least some banks on Tuesday, saying they would all remain shut until Thursday to ensure the "smooth functioning of the whole banking system".

Cypriots are expected to besiege banks as soon as they reopen after the shutdown, which began over a week ago.

(Reporting By Katharina Bart; Editing by John Stonestreet)