Filenews 23 May 2022 - by Eleftheria Paizanos
A flood of questions from professional sectors cooperating with Russian and Ukrainian businessmen is received by the working group set up last week by the Ministry of Finance, aimed at guiding economic operators in Cyprus in relation to European sanctions imposed on Russian interests. Yesterday, the Ministry of Finance provided guidelines on a number of issues in writing, pending formal guidance from the European Commission.
In a statement, the Ministry of Finance gives clarifications on grey areas included in the sanctions. Specifically, for the provision of services to persons and entities sanctioned, the ministry notes that the provision of services is allowed (but strictly limited) only for the continued existence of the company or person and for the core activities, without which they could not operate legally.
The ministry cites an EU opinion, in which basic services include drawing up annual accounts, keeping accounts, declaring taxes, ensuring the administrative management of a company and paying taxes. In fact, the ministry warns that if it is later found, by the competent authority, that the services provided to a person under sanctions were not necessary, their payment will not be approved.
General payments
With regard to the authorisation of general payments to sanctioned persons, the ministry believes that their money, which they hold in banks, will be able to be released to pay off debts to the state, such as taxes, social insurance, company fees and utility bills. In this way, the communication notes, it will be ensured that no money is made available to persons who have been subject to restrictive measures. Banks should ensure that money is paid for debts to the state. The funds will also be released by the bank for payment of debts, by means of a transfer or direct debit from the bank account of the person to whom the penalties were imposed. Every month banks will have to communicate to the competent authority details of the money they release to natural and legal persons with penalties.
Exceptions
Moreover, "for any other blocked capital exceptions that may be allowed, in accordance with Council Regulation EU 269/2014 of 14.3.2014, credit institutions should contact the competent authority, the Financial Sanctions Advisory Body (SOOK), following the existing procedures", the ministry adds. For financial sector-related exemptions, stakeholders should contact the competent authority, the Financial Sector Sanctioning Unit (MEP).
What about the others
In relation to legal persons/entities established in Russia and not subject to sanctions, the ministry notes that "the definition of entities established in Russia refers only to entities incorporated or registered under Russian law, including their branches." Therefore, legal persons, entities or bodies incorporated or registered in a country other than Russia are not covered by the Regulation. This includes, according to the ministry, also companies registered or incorporated in Cyprus and operating under Cypriot law, regardless of whether they are of Russian interest. It also clarifies that this does not apply to natural and legal persons or entities subject to sanctions. Regarding the ban on taking deposits over €100,000 per banking institution, by Russian nationals or natural persons residing in Russia or legal persons, entities or entities established in Russia, the ministry considers that this restriction should not apply in cases where the amounts are intended to repay their own liabilities, such as loans and current accounts.
