While the Cyprus government was negotiating its 13 billion euro bailout with the EU, a large, unknown sum of euros were being siphoned out of its two major banks, despite capital controls that were supposed to prevent it.
Although the major banks were supposed to be closed, some depositors were able to access their funds through a variety of means. And no one knows how much cash left the country.
EU negotiators knew something was wrong when the Central Bank of Cyprus requested more banknotes from the European Central Bank than the withdrawals it was reporting to Frankfurt implied were needed, an EU source familiar with the process said. "The amount the Cypriots mentioned... on a daily basis was much less than it was in reality," the source said.
Confusion over just how much money was pulled out of Cyprus' banks is illustrative of the confusion surrounding the negotiations as a whole. Representing just 0.2 percent of the euro zone economy, Cyprus nevertheless threatened to reignite the bloc's debt crisis. Cyprus' problems began in Greece - it is heavily exposed to the euro zone's first bailout casualty.
No one knows exactly how much money has left Cyprus' banks, or where it has gone. The two banks at the center of the crisis - Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus - have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia's Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks' largest depositors.
While ordinary Cypriots queued at ATM machines to withdraw a few hundred euros as credit card transactions stopped, other depositors used an array of techniques to access their money.
Companies that had to meet margin calls to avoid defaulting on deals were granted funds. Transfers for trade in humanitarian products, medicines and jet fuel were allowed.
Chris Pavlou, who was vice chairman of Laiki until Friday, said while some money was withdrawn over a period of several days it was in the order of millions of euros, not billions.
German Finance Minister Wolfgang Schaeuble said the bank closure had limited capital flight but that the ECB was looking closely at the issue. He declined to provide figures.
This is important because the bailout deal is very dependent on the government being able to seize up to 40% of deposits over 100,000 euros in order to meet the demands of the EU for a contribution of 5.8 billion euros toward the bailout. If enough cash managed to squeeze out of the country, Cyprus will come up short in its contribution and the EU may back out of the deal.
Cypriot banks turned a blind eye to the fact that a lot of those Russian deposits were from organized crime and drug dealers. That was the attraction for parking large amounts of cash in Cyprus in the first place. Given the lax oversight that partially led to the bank crisis, it is not hard to imagine that hundreds of millions of euros may have exited Cyrpus banks over the last few days prior to the bailout agreement.
How many more surprises will Cyprus have for the EU before the bailout deal is finalized?