Cyprus companies caught up in sanctions make progress on frozen accounts

Cypriot companies caught up as collateral damage from Western sanctions against Russia are making the changes needed to unfreeze their accounts, with an official on Friday estimating all should be ‘freed’ within a week.

Registrar of Companies and Intellectual Property Irene Mylona-Chrysostomou told CyBC that the majority of the approximately 600 companies impacted by the US’ initial sanctions list have secured the paperwork to submit to banks and therefore unfreeze their accounts.

Chrysostomou added that most of the companies have proceeded with the necessary changes regarding their corporate structure.

She explained that the same process is now underway for those impacted by the second sanctions list issued on May 19.

Chrysostomou said there are about 300 companies impacted from the second list although new applications are still being received, however she does not anticipate a notable increase.

Commenting on the second round of sanctions, which initial reaction claimed did not impact Cyprus to a great extent, the registrar clarified that the US list did in fact have an impact.

“Therefore the process is now underway to identify those companies and assist them in being released,” she added.

The Cyprus Mail spoke to experts on May 17 who warned “overcompliance” was occurring and hitting the economy in unintended ways.

At the time, it was reported that the impact goes beyond just the service sectors. Scores of people have lost their jobs, and companies shut down, but more controversially – clients of sanctioned entities have also seen their bank accounts frozen.

The confusion stemmed from the fact that banks in Cyprus moved to freeze accounts of clients tied to sanctioned entities. This also encompasses clients that used the now-sanctioned firms for licensed administrative services including trustee, directorship or nominee shareholders.

The government faced criticism for its approach but then said it would assist those who were hit as collateral damage.