On 22 March 2022, the Cyprus Ministry of Finance (the Ministry) issued an announcement providing guidance on certain aspects of the EU-Russia sanctions regime following the receipt of requests from market participants in the jurisdiction.

• In relation to the term "legal persons, entities or bodies established in Russia", used in the context of sectoral sanctions regime (under Regulation (EU) No 833/2014, as recently enhanced):
  • The view of the Ministry is that the definition refers only to entities incorporated or registered under the laws of Russia including their branches. Legal persons, entities, or bodies incorporated or registered in any other country other than Russia should not fall within that term.
  • Consequently, companies registered or incorporated in Cyprus and operating from Cyprus internationally (presumably including in Russia) would not be included – irrespective of the fact that a company might be of Russian interest.
• In relation to the prohibition of accepting deposits from Russian nationals or natural persons residing in Russia, or legal persons, entities or bodies established in Russia, more that €100,000 per person per credit institution:
  • The view of the Ministry is that the prohibition should not apply in the cases where the amounts are intended for the repayment of own liabilities, eg loans, current accounts.
• In relation to the provision of services to sanctioned persons or entities:
  • The view of the Ministry is that the provision of services to a sanctioned entity can only be permitted when these services are strictly limited to acts “absolutely necessary” for the on-going survival of the entity and strictly limited to essential activities without which the person/entity would not be able to function legally.
  • Please note Harneys’ observation on the above view: this view should be treated with caution and professional advice should be obtained before relying on it.
• In relation to the "general authorisation" of specific payments from sanctioned persons and entities:
  • The view of the Ministry is that the release of frozen funds by a credit institution, for the payment of amounts due to public authorities namely: tax, social insurance, company registrar fees, and public utilities charges, should be “considered as authorised”.
  • Please note Harneys’ observation on the above view: this view should be treated with caution and professional advice should be obtained before relying on it.
• In respect of licensing requests for exemption requests for frozen funds permissible under the EU asset freeze regime in Council Regulation 269/2014.
  • Credit institutionsshould apply to the competent authority through the Advisory Body on Economic Sanctions (SEOK) following existing procedures.
  • Other persons should apply to the competent authority through the Unit for the Implementation of Sanctions in the Financial Sector (ΜΕΚ or the Unit) following the existing procedures.

The Ministry’s official announcement can be found here.

Our blog post on the Ministry’s recent press release can be found here.