Sergey Stopnevich: “Handling finances. This is what we can do best”
The WWG (Wise Wolves Group) has appeared on the Cyprus market quite recently, but already managed to declare itself in the world of finance, high technology, as well as corporate and private services. Sergey Stopnevich, the company co-founder and its Managing Director, has told us about his business history, his goals and strategies in the Cyprus service market.
Sergey, how did the idea of creating a company, particularly in Cyprus, arise? What factors have influenced the decision?
The company history began in 2016. My spouse, Anna, and I launched the company. Actually, it was Anna: she and our children were first in Cyprus and she established the essential company. Have we taken into account any significant factors that would influence our decision to establish business in Cyprus? No, we haven’t. It has happened at that time and at that moment when we simply accepted the circumstances as they were.
When we came to the island, we realised that it was a great place where we can settle, organise our own business and try to apply our 20-years business experience. We have realised that finance is what we do best. Why not implement such an experience in Cyprus?
A huge number of companies on the island represent corporate services; nevertheless, having personally been confronted with how it is done, we realised that we could do it better in terms of service, responsiveness and, mainly, the Russian mentality, as for the quality of services and how we should respond to the client. In fact, this is where we decided to start our business. Therefore, we created the Wise Wolves Capital company, which specialises in the administrative services and plays one of the important roles in our common WWG business.
What obstacles have you encountered on the way to building your company?
I can answer this question right away – these were people. When we started to create a business, I needed a professional team that could work in the rhythm I was used to. We started hiring employees. People came with excellent degrees and work experience; it would seem to be all that was necessary for my business. However, after a month or two, it became clear that they did not know how to work the way we needed. Therefore, in the first year and a half, we had to change the staff. We dismissed people with excellent CVs, who, in reality, could not embody our business idea and could not work the way I wanted and how I used to do it in Russia – the way it was necessary for business. Perhaps, it was one of the most difficult moments in Cyprus; the most memorable pitfalls.
Now, in our team, we have gathered motivated, like-minded people, who love their work and are professionals in their field. It took us three years to build up this team, and the process is continuing.
What regulatory difficulties have you had to deal with? What are your comments on the regulator’s requirements?
As for obstacles in terms of regulatory difficulties, I suppose we haven’t confronted any. We expected exactly what we got in the end. We have applied to CySEC (Cyprus Securities Commission) to obtain a license several times, in two business areas. We were applying for a license to the Central Bank – and I think that for the preparation of documents and the processing of information, provided by us to the regulators, it took exactly as much time as expected. As a result, we received that reaction, those licenses and the regulated position that we now have. Therefore, from the point of view of regulation at a start-up, I was satisfied with both the decision-making deadlines and the result.
What entry barriers do you see for a foreign financial business in Cyprus?
I think the emphasis should be on partnership. When you move to Cyprus, you have to choose the right partner who can advise not only on how to gain income, but also how to function in different areas of activity. A company incorporation, tax regulation and accounting; how to open bank accounts for business or payment accounts; how to solve the issue with the migration services; how to structure shareholders’ capital, which allows you to conduct business and clearly regulates the shareholder parties – all the issues together are very important for a business entering in Cyprus.
Finding the right partner, competent in the main points, is one of the most important decisions to enter the Cyprus market. It will help to avoid many difficulties with the wrong decisions, with registration, and, of course, payment, because you have to pay for all this. My goal was to build a company for this very purpose: so that a client, having come to WWG, would receive business support from all sides. We find solutions for any kind of requests, both in the legal and financial fields. Our main goal was to create an infrastructure that would allow diverse business support at once. We have become a company that can be considered a reliable partner. By the word ‘reliable’, we mean confidentiality, transparency, honest feedback and loyalty.
How is the business environment in Cyprus different from the Russian? What are the pros and cons here?
These are completely different things, like heaven and earth. Business in Cyprus is a service for business in Russia. The Russian business is fundamental. It is associated with the raw materials and processing of resources, and with new technologies, including production ones. On the other hand, Cyprus is more of a service partner, which provides convenient solutions for various types of businesses in terms of equity, business retention, payments, tax optimisation, and so on. Moreover, Cyprus is Europe, and everything that is used to provide services for the Russian business is done according to European legislation, which overtakes the Russian in terms of security and regulation.
In turn, we, as a financial boutique, are distinguished by high quality services. In Cyprus, you can face the steady pace of service. As for us, we are dynamic in the Moscow-style, but we comply with European quality and safety standards.
What are your key services and which ones do you plan to rely on for further development?
We have been working on the development of infrastructure, high technology, regulation and proper structure of AML and compliance systems since the first day of the company’s foundation. Now, WWG has a variety of business areas, ranging from the corporate service to secretarial services and to the payment systems.
Our core business is brokerage within our brokerage house Wise Wolves Finance. We are fully licensed and regulated by CySEC. Here, we act as counterparties – we interact with banks to finance various projects, work with clients to structure complex contracts involving purchases, mergers and acquisitions of companies, as well as we have various financial instruments. In the same segment, we work with trusts that we create to preserve and protect private equity.
The second direction is services for corporate clients that need to structure transactions related to debt, equity, bonds and shares, repo agreements.
We also opened a segment of derivative instruments, that is, corporate clients with us are interested in carrying out transactions related to risks hedging.
For the time being, we are focused only on currency pairs, such as RUB / USD, EUR / USD, RUB / EUR and so on. We have the possibility of placing assets in Euros and USD dollars, with higher interests.
We have recently received the Central Bank of Cyprus license and started working as a payment institution. Many people ask, “What is it?” The answer shall be as follows: this is the same as a bank, but without credit risk. We differ from the bank in that we cannot accept deposits and issue loans – we provide only settlement services: we open payment accounts and give our clients the opportunity to conduct business in terms of settlements. Plus, the payment institute issues guarantees on migration registration for people who come to work in Cyprus – now, it is becoming more and more difficult to do it in the real banking sector.
The WWG anchor is our Fintech Company that develops software in the field of finance, which is necessary for brokerage and payment firms, and players of the corporate service market. These are the so-called back-systems that are the settlement systems, accounting, reporting, automation and private offices for brokerage, payment, as well as corporate business systems. We provide a full range of IT services, from the system administration, the cloud servers rental and the preparation of a common IT infrastructure for both existing and newly created companies in the financial sector.
What business areas do you see as the most promising in Cyprus at the moment?
I think the number one direction is payment institutions, which will become an alternative to banks, offering both settlement services and opening accounts.
The second promising direction is the assets protection by means of trust creating. Therefore, we can act in a trust as a company that can own and manage private capital and provide services to ensure its safety.
The number three direction shall be brokerage. An alternative to keeping capital in bank accounts is storing assets in securities, in bonds, which allows you to get a certain return. In addition, a separate direction, which will be mega-actual, is automation in all of the above areas. Not much attention has been paid to automating financial and legal processes so far in Cyprus.
How do you solve the issue of staff qualifications and training?
Currently, there are 40 highly-qualified employees in WWG who clearly understand their goals and have serious experience in their fields. When hiring people, we primarily pay attention to their experience and qualifications, but I also make a strong emphasis on the creative thinking and decision making, on the versatility of employee development. Such a person should be in my team, and we are looking for such people.
In terms of staff development, we constantly hold internal events for employees to increase their competence in those areas in which they do not yet possess it. The main emphasis, of course, is on sales and marketing. Every person working in our company clearly understands what marketing is, and also that any of his/her actions should be monetised; every task that he/she solves should benefit the work. We hire coaches, who change our company thinking, and this brings quite serious results. We are constantly trying to strengthen the moments of our staff education so that all employees understand what our common goal is.
THE COMPANY GOALS AND OBJECTIVES
What are the company main goals?
Get a satisfied result with our service client, who will then recommend us to other business players. When I will hear from clients that WWG is the most responsible and professional group of companies in Cyprus, the most reliable business partner, then my spouse and me, as well as our employees, will be able to say that we have achieved our goal.
Your business is quite diversified, so the question is who your clients are, where they are located and how do you see their service now and in the future.
Our clients are as diversified as our company is.
If we are talking about a private client, it is the one who owns a certain capital that needs to be preserved and multiplied. These people need to feel secure about the future.
We provide them with a set of solutions that include either the incorporation of a company or trust mechanisms. Professional trust maximally protects the client’s assets from claims of any third parties and, in the aggregate, creates profitable portfolios of securities, bonds, stocks and other financial instruments … it all shall depend on the client’s preferences.
The second type is a corporate client, usually from the countries of the post-Soviet space, which is active in international trading and moves to Cyprus to create a business and its structure. Here, we offer a wide range of services in terms of protecting the clients’ capital.
If trading companies operate in the Russian segment, they always face the need for foreign exchange operations, with the problem of exchange differences. And, here, we can help to provide competent solutions so that the business and the capital of the business will always work and generate income, no matter at what point they are needed.
The third direction is related to financial institute clients; these are banks, brokerage and insurance companies.
As for this type of clients, we establish counterparty relationships, through which we implement a variety of financial transactions and instruments, such as financing transactions through the pledge of financial assets (repos), currency and interest swaps, and dual-currency investments.
Do you consider your company as Russian, operating in the Cyprus market, or as purely European?
We consider ourselves as a purely Cypriot company. We came to Cyprus and here we started to build our business from scratch and develop it, to apply our knowledge and experience. Moreover, I see my company as one operating in the Cyprus market segment.
Our company provides services and facilities for a wide range of clients from different parts of the world, including from the entire post-Soviet space. Therefore, we do not see our company as a Russian company and provide services in terms of the benefits that our clients in Cyprus can receive.
Does your company have a cornerstone investor?
The company was created by my spouse Anna and me, and the fixed assets that were invested in it we had earned over 20 years of hired labour in large companies. Therefore, there are no other investors and partners who could influence our business.
Today, quite a lot of companies offer asset management services, ranging from multi-family offices to professional asset managers and banks. What makes the WWG different from similar local companies offering asset management services?
We do not manage assets. We provide high-quality services in order to preserve these assets, multiply them and structure them correctly, by structuring stockholder capital and structuring a business. We work more in the professional financial market. Therefore, if we are treated as a family office, we operate both in private and corporate sectors. This is our main difference from family offices. Plus, we widely cover services related to settlements and high-risk financial instruments, which also distinguishes us from other market players.
We have a very professional approach to derivative instruments, settlements and management of payment businesses. The reason is quite simple: Anna and I received a financial education in the banking and corporate sector. We have worked in the financial sector for a long time and we clearly understand what needs to be done for the client to be satisfied and get what he/she wants to receive: dynamic services, understanding and prompt feedback.
Where do you see your main advantages? What fundamentally new do you offer to your clients?
If we take each segment from those offered by us, there will be companies in the local market that provide such services separately. We provide them in aggregate – we can say that we have a financial technology centre and a financial services centre. We cover most of the client’s business support needs – that is, we have a wide range of professional business support. This saves the client’s time significantly, who does not have to file documents and answer the same questions several times in different instances – the information is “in the same hands.” Therefore, we have the opportunity to quickly open a checking account or issue a migration guarantee, and this often takes a long time and takes a lot of effort.
What client base are you, after all, focused on, corporate or private?
We are focused on both segments, both private and corporate ones.
Who are your main competitors and why?
If we consider each direction of our business separately, then we have quite a few serious and strong competitors in the Cyprus market – brokerage companies, corporate service providers and IT companies. Nevertheless, if we take our company as a business service centre, then every competitor is my potential client. If I see competitors in corporate services in Cyprus, I can interest them in our business solutions. If I see competition in the brokerage sphere, we can translate it into a partnership, suggesting, say, our high-tech capabilities. Therefore, the more the market will perceive us as competitors in a particular area, the more customers and partners we gain.
However, there is one ethical nuance: If a competitor comes to me and brings his corporate client, we only provide him with our service in part, but in no way will we work with him/her – these are the limits set by us initially.
Taking into account the growing requirements for compliance and due diligence, what procedures and processes have you created in the company to check the sources of funds and risk management?
In the WWG structure, there are companies that are regulated by two bodies – CySEC and the Central Bank of Cyprus. We comply with all regulatory requirements of these regulators, both in AML and compliance, and in the reporting as a whole, and we are very strictly monitored for the sufficiency of capital and for the custody of clients’ funds. I think we are a very strictly regulated company and, accordingly, we place great emphasis on the regulatory standards implementation.
In each of our business areas, there is a group of employees who is responsible for the work on meeting regulatory requirements, including internal audit. Due to this work, we comply with all the standards imposed by the European Union in general and Cyprus in particular.
What specialised expertise shall be offered to Russian clients located in Russia, but possessing assets in different jurisdictions?
Everything here depends on the client’s needs, his/her location, as well as business scope and tax status. Only with a combination of understanding of all these components can we put together a puzzle that will allow us to manage the client’s business with minimal risk.
I’ll repeat once again: Finance is what we know best. Investing, business structuring, dual-currency investments, payment system, taxation issues – in this all, we feel as in our native element. Moreover, we are not just a reliable partner, but also a highly qualified team; experts who are not only good judges of their work, but also truly love it.