A new list of Cypriot individuals and companies affected by Western sanctions against Russia and Russian citizens will reportedly be published on Friday. Already in April 2023, 13 Cypriot lawyers and tax advisors were added to the sanctions list. The Bank of Cyprus is said to have frozen up to 10,000 bank accounts. The Cypriot banks are reacting hyper-nervously and are apparently freezing bank accounts en masse, with non-sanctioned companies and individuals also affected.
Frozen Bank Accounts
Banks in Cyprus have become increasingly cautious regarding the sanctions imposed by the US, EU, and UK. They are hesitant to take any risks in providing services to individuals or entities in Cyprus who are under sanctions or may be related to sanctioned entities. Even accounts categorized as high-risk, regardless of their connection to sanctions, are being frozen.
In April, when sanctions were imposed on two Cypriot companies that had been offering legal and administrative services to Russian oligarchs, banks promptly froze all accounts associated with the directors of these companies. This means that even if a director of the sanctioned companies was serving on the board of a separate company with no connection to oligarchs or sanction violations, their accounts were also frozen. Additionally, banks froze the accounts of companies engaged in legal disputes with the administrative services provided by the sanctioned companies.
According to the Finance Ministry in Cyprus, approximately €1.2 billion in Russian-owned assets managed by Cyprus-registered companies have been frozen, the Financial Mirror reports. The ministry stated that the “vast majority” of these assets were held in credit institutions within the European Union, with an additional €105 million frozen by banks in Cyprus.
During the presentation of the Bank of Cyprus‘ financial results, CEO Panikos Nikolaou clarified that it is not the banks’ responsibility to seek exceptions for processing salary payments that may be pending for frozen individuals or entities. The Bank would strictly adhere to the sanctions imposed by the US, EU, and UK, following the protocols, guidelines, and obligations in place, Nikolaou said.
The mass freezing of funds from non-sanctioned companies also results in the inability to pay salaries and bills. It becomes difficult for these companies to maintain ongoing operations. They are the collateral damage of the Western sanctions.
Cyprus companies that are not sanctioned by somehow related to sanctioned entities or individuals have faced difficulties when attempting to make legitimate changes to their boards. The registrar of companies denied their requests for changes. It appears that the registrar received instructions from the Cyprus government to reject any changes involving the directors and secretaries of these companies.
Law Firms In Crossfire
Five law firms in Cyprus are under investigation by police concerning the possible provision of services to sanctioned Russian oligarchs, Philenews reports. The Cyprus Bar Association is currently conducting 36 audits of law firms in connection with the same allegations.
Head of the Cyprus Bar Association, Christos Clerides, said there is reasonable suspicion from witness material that four law firms may have violated European Union sanctions.
If you have information about sanctions violations by individuals or entities, please share it through our whistleblower system, Whistle 42.