Individuals and entities in Cyprus that have been included in the sanctions list of the UK and the US will see their assets frozen in Cyprus’ banking system and will be prohibited from conducting any transactions inside the country, Marios Skandalis, chief compliance officer of Bank of Cyprus told the Cyprus News Agency (CNA).
Last week, Cypriot individuals and entities “in connection with the Russian Federation’s unlawful and unprovoked invasion of Ukraine, including facilitators of sanctions evasion” were sanctioned by the US Treasury and the UK Foreign Office.
Speaking to CNA, Skandalis recalled that the Cypriot banking system voluntarily implemented the US and UK sanctions as a “step forward,” a move that was rewarded by increasing the number of correspondent banks clearing US dollar transactions from one to four.
He explained that Cyprus’s banks can choose not to implement the US and UK sanctions, but only the EU and UN sanctions, but questioned what it would mean for Cyprus’s economy if correspondent banks were unable to continue clearing transactions in American dollars, causing problems for the economy.
“We are not just a European state, we are a state that adopts best practices in the field of combating financial crime,” Skandalis said.
The Bank of Cyprus head of compliance said that “following the imposition of sanctions, mainly by the US or the UK, against any person, whether natural or legal, their assets in the Cypriot banking system are frozen.”
This means, he explained, that “the money will not be returned to that person, while their bank accounts will not be closed until the respective authorities that imposed the sanctions have clarified what will happen to those assets”.
Skandalis noted that the Finance Ministry’s Economic Sanctions Advisory Committee (Seok), the body responsible for implementing sanctions, will determine the next steps.
“If Seok determines that a particular person is not related to the sanctions and that there has not been a violation of US secondary sanctions, the committee may decide to close the accounts and return the funds to a bank that a particular person has overseas.”
Secondary sanctions imposed by the US relate to persons or entities that may be indirectly facilitating the transactions of a person included in the sanctions list, and not only in US dollars, he added.
Skandalis said that Cypriot persons and entities on the sanctions lists cannot carry out any transactions with the Cypriot banking system.
“Compliance with the sanctions of either the UK or the US is implemented by the Cypriot banking system as a whole,” he said.
Responding to a comment by the Cyprus Bar Association saying there was no evidence that these individuals were involved in sanctions evasion, Skandalis said this should be investigated.
“If there is a mistake, the authorities involved will correct it. But as long as (these individuals) are on the sanctions list, the banks cannot do anything else,” he continued.
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