Cypriot service providers included in sanctions lists issued by the US and the UK as sanctions-busting enablers are “facing operational issues,” president of the Institute of Certified Public Accountants of Cyprus (Selk) Paris Markou told Active Radio.
Markou also noted that the sanctions have not been ratified by the EU and that there is a fear that more companies could see their names in sanctions lists in the future.
Anyone employing 200 workers without being able to pay their salaries would need special permission from the Ministry of Finance, which is not easy to obtain, Markou said.
“When we have sanctions, which are not enforced in Cyprus, but the banks comply, the companies have their accounts frozen and this causes operational issues in the sense that they are not able to make any expenses,” he said.
Selk, he added, is a regulatory body and often conducts inspections, during which it refers violations to the relevant authority, which is the Ministry of Justice.
“To date, we have not received any information as to the reasons for which our member has been sanctioned. This is because it is not included in the European sanctions list. We expect the Ministry of Finance to inform us as soon as it has the details so that we can also take action and exercise control,” Markou said.
On April 12, Britain sanctioned two Cypriots, and the U.S. about a dozen Cypriots or dual-nationals for alleged ties to people or entities sanctioned over Russia’s invasion of Ukraine.
Cyprus has said it would not tolerate any deviation from EU sanctions on Russia and added it was in touch with the US and Britain for more information.
The developments have alarmed Cyprus which has a thriving services industry, in part built on hosting an extensive network of businesses with links to Russia, and a past reputation of light-touch regulation.
Meanwhile, Bank of Cyprus, the island’s largest bank, said it had notified around 4,000 clients with Russian passports who were not resident in the EU that their accounts would be closed.
Moreover, the British newspaper The Guardian released a cache of confidential documents – named “The Oligarch Files” – leaked from the Limassol-based service provider MeritServus.
“The Oligarch Files” reveal, among others, how MeritServus helped Konstantin Malofeev, an oligarch sanctioned for his support of Russian-backed separatist rebels in Ukraine, move loans between his Cyprus shell firm and his other companies, in violation of EU and US sanctions.
Also, among the 300,000 documents leaked from MeritServus and its affiliated companies, there are files suggesting the firm helped Roman Abramovich reshuffle the trusts he used to manage his wealth to avoid asset freezes.
Furthermore, they show how Abramovich used entities registered in Cyprus to transfer money to London, helping to build Chelsea Football Club into one of the best teams in the world.
Critics say that the influx of Russian money into the Cypriot economy has inflated property prices, leaving many unable to rent or purchase homes while painting the country in a bad light for its dodgy dealings with oligarchs and internationally wanted criminals through the now-defunct “Cyprus Citizenship by Investment” scheme.
On the other side, proponents say that the money was crucial in helping Cyprus overcome the 2013 financial crisis by having a trickle-down effect on the economy.
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Cyprus says will not tolerate sanctions-busting amid scrutiny