US welcomes cooperation with Cyprus on sanctioned individuals

US Ambassador to Cyprus Julie Fisher has hailed the cooperation between the US and Cyprus in holding to account those enabling Russia’s war on Ukraine.

Her statements just before midnight on Thursday came on the heels of US and UK sanctions that hit dozens of Cypriot individuals and entities. The news of 23 sanctioned Cypriots – 10 of whom are Cypriot born and 13 who have dual nationalities mostly from Russia – rocked the political scene as the government convened an urgent meeting 24 hours after the sanctions hit.

The US also sanctioned 18 Cyprus-based companies, while the UK sanctioned two companies in Cyprus.

They have all been described as “financial fixers” helping sanctioned Russian oligarchs Roman Abramovich and Alisher Usmanov to hide their assets in complex financial networks.

A US embassy spokesperson told the Cyprus Mail the US “greatly values its partnership with the Republic of Cyprus, including to counter illicit financial flows.

“We remain committed to working with our Cypriot partners to hold to account key enablers of the Kremlin’s unjust war against Ukraine.”

The sanctions effectively freeze all transactions in the US and UK and impose a travel ban. Nonetheless, it led to a knock-on effect in Cyprus’ banks, which moved to freeze all bank accounts of sanctioned individuals.

The government described the matter as “very serious.” During an urgent meeting headed by President Nikos Christodoulides, senior officials, including from law enforcement, were summoned to the palace meeting.

In a statement afterwards, the government spokesman described it as “a brainstorming session” in relation to the US and UK sanctions.

“A new round of designations announced against key individuals and entities enabling Russia’s war against Ukraine have taken effect. The US greatly appreciates the support and cooperation between American and Cypriot authorities to ensure coordination to hold them to account,” Fisher said in a tweet.

What remains to be seen is if the EU moves to adopt the sanctions – which will mean Cyprus will also have to comply.

Under Cyprus’ legislative framework, Cyprus is required to abide by EU and UN sanctions. Though the UK and US froze all banking transactions and implemented a travel ban, Cyprus is not required to adopt it.

The Central Bank of Cyprus explained that “UNSC Resolutions and EU restrictive measures are directly applicable in Cyprus by virtue of domestic legislation. Violation of these sanctions and restrictive measures is a criminal offence.”

However, in cases where measures are taken “unilaterally by other countries”, banks evaluate any affected business relationships and take relevant decisions on the basis of their policies.

As the US embassy spokesperson explained: “our understanding is that while the government may not have to sanction them, Cypriot banks may have to follow through and freeze the assets of these individuals.”

Banking sources however explained to the Cyprus Mail that banks tend to follow UK and US sanctions to protect their international reputation –and indeed, all Cypriot accounts of sanctioned individuals were immediately frozen.