12° Nicosia,
14 June, 2024

New sanctions list expected by the end of May

Passport processing firms targeted by the authorities

Panayiotis Rougalas

Panayiotis Rougalas

The episode with the sanctions imposed by the United States and Britain on natural and legal persons that include Cypriot names is expected to continue. As "K" reports, a new list of names of natural and legal persons is expected to arrive in Nicosia by the end of May, but the number is not known. The new list will not be related to the explanatory lists received by the President of the Republic on Monday, May 8, which concerned persons already under sanctions announced in April 2023. New Cypriot names on the lists of Americans and British will bring new turmoil to the Cypriot business community, with economic and political implications. The state will have to handle as effectively and quickly as possible an additional issue and apply exactly what is communicated to it by the American and British authorities. It turns out that the umbilical cord of the decades-long relationship between the Cypriot business community and the services sector in the East is difficult to cut, despite the indications and prohibitions. Returning to the new possible list of sanctions, it suggests that offices that have received many passport processing jobs through the foreign investor naturalization program are now in the crosshairs. The naturalization program proves that, although it was initially thought to bring economic benefits to the island, it has become a tool for circumventing international sanctions.

Regarding the explanations received on Monday, May 8th, the President of the Republic, Nikos Christodoulides, stated on Tuesday in his speech at the 13th Economic Conference that he did indeed receive the first information from the US regarding the sanctions that were announced in April. As he explained, it is the first package of information and two more will follow in the near future. "Already, this morning I spoke with the Attorney General, all the information we received yesterday will be sent to him today so that the relevant authorities of the Republic can begin their work while waiting for the other two packages of information from the US," he said in his speech on Tuesday. For the President himself, as he emphasized, safeguarding the credibility and reputation of Cyprus as a business and financial center, especially after the recent sanctions imposed by the United States and the United Kingdom on Cypriot service providers, is of utmost importance. On the issue, he concluded his speech with the following: "It is imperative that we approach this particular issue with the appropriate seriousness and do everything possible to prevent anyone from tarnishing the name of our country and I am sure that you, who are the backbone of our economy, will contribute significantly to this effort."

Difficult to 'unfreeze'

As "K" can attest, Cypriot banks have not yet received any requests for the "thawing" of funds to pay obligations of entities on the list of American and British sanctions. As explained by banking circles, it is a process that requires the natural or legal person under sanctions to request a special license from the competent authority of the state that imposed them, in order to "thaw" capital to pay any obligations. In other words, the natural or legal person does not directly request the bank to "thaw" some funds to pay, for example, bills to the Cyprus Electricity Authority. Instead, they need written approval from the state to return to the bank and say that they want the "x" amount to pay the "y" part. The situation is complicated and not easily unraveled.

Quantity vs quality

As reiterated by the newspaper and emphasized by market factors, the forthcoming sanctions will place greater importance on quantity rather than quality. This means that having a "big" name law firm, for instance, on a potential sanctions list is inconsequential, but having too many names would inevitably lead to a short-term economic predicament in the Cypriot market. The inclusion of "many names" is accompanied by numerous employees and open-ended obligations, including unpaid dues due to the immediate "freezing" of assets, and a general "domino effect." Nevertheless, highlighting relevant factors reveals that Cypriot banks have fulfilled their responsibilities appropriately and have minimized the risks associated with them. It would be highly beneficial if other professional sectors had made similar preparations. 

[This article was first published in Kathimerini's Oikonomiki edition and translated from its Greek original]

Cyprus  |  economy  |  USA  |  UK  |  sanctions

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