Our View: Government and banks behaved competently over sanctions lists

The sanctions imposed on Cypriot companies and individuals by the US and UK last week took the government by surprise. It was not expecting this and found itself in a quandary over what it should do. Sanctions affected 23 Cypriot passport holders – 10 Cyprus-born – and 18 Cyprus-registered companies, but there could be more in the future according to reports.

President Nikos Christodoulides called a broad meeting at the presidential palace that included ministers, the attorney-general, top civil servants and presidency officials to discuss what should be done. Government spokesman Konstantinos Letymbiotis, who described the meeting as “a brainstorming session,” said “decisions had been made about the further handling of the matter as well as about an investigation of the data that led to the imposition of sanctions.”

Understandably, nothing more specific was said after the meeting as there was no obvious action for the government to take. Even the investigation announced is unlikely to yield any results. Appearance-wise the government handled the matter very well, responding immediately to the news and the president communicating to US officials the government’s readiness to cooperate. The response received public praise from US Ambassador Julie Fisher, who tweeted that “the US greatly appreciates the support and cooperation between American and Cypriot authorities to ensure cooperation to hold them (Russia’s enablers) to account.”

By Tuesday, the government’s stance toughened, Letymbiotis announcing that the government would explore the possibility of initiating criminal proceedings against any individuals who knowingly assisted oligarchs under EU sanctions to hide their assets. Only EU and UN sanctions apply to Cyprus. Sanctions imposed by countries like the US are not applicable here and their violation cannot lead to criminal proceedings. The US and UK sanctions were linked to the handling of assets of Russian oligarchs long before the imposition of EU sanctions in 2022 – some of the money transfers took place more than 15 years ago.

According to president of the Cyprus Bar Association Christos Clerides there was no evidence of violations of EU sanctions by Cypriot lawyers. In fairness, there had been no mention of violations of EU sanctions by either the US or UK, but the government must nevertheless proceed with an investigation to make sure there had been no violations.

Cypriot banks could not be seen to prevaricate, even if the US and UK sanctions were not applicable to Cyprus. “There was no wait and see,” a banking source was quoted as saying. Assets of sanctioned clients were immediately frozen by the banks which could have been penalised by the US if they failed to do so. As the same source told the Cyprus Mail, “banks trade in dollars, in sterling and have an international reputation to uphold.”

Both the government and the banks did what was expected of them as soon as the sanctions were imposed. There was no prevarication or hiding, which was good for the country.