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Announcement of Ministry of Finance regarding the implementation of sanctions against Russia

Announcement of Ministry of Finance regarding the implementation of sanctions against Russia

(replacement of announcement dated 22.03.2022 and 13.04.2022)

In relation to the above, the announcement of the Ministry of Finance (MoF) on 14.03.2022, 22.03.2022 and and after receiving guidance by the European Commission on specific issues regarding the effective implementation of the measures, the MoF is providing below some guidance on selected specific issues.

It should be recalled that the following should not be construed as overriding the authoritative guidance that the European Commission is providing.

1. In relation to non-sanctioned persons/entities

The guidance of EU reads as follows:

The terms “entities” in article 5b of Regulation (EU) No 833/2014 as amended by Regulation (EU) 328/2022 comprises all entities established in Russia, including subsidiaries of EU operators which are incorporated in Russia.

The prohibition does not apply to those deposits that are necessary for non-prohibited cross-border trade in goods and services (Article 5b(3)). Moreover, Article 5c and 5d enable the competent authorities of the Member States to authorise the acceptance of such deposits in limited and well defined circumstances.

The prohibition in Article 5b of Regulation 833/2014 only apply to Russian nationals or natural person residing in Russia or any legal person, entity or body established in Russia. Strictly speaking, it does not apply to entities owned by Russian/Belarussian nationals or natural persons residing in Russia/Belarus when the entities are registered in a country other than Russia/Belarus. However, the provision should be read in conjunction with Article 12 of Council Regulation 833/2014 which prohibit to participate knowingly and intentionally in activities the object or effect of which is to circumvent prohibitions in the Regulation. EU operators should therefore exert enhanced due diligence when the deposit is made to an account of an entity owned by a Russian national or a natural person residing in Russia.

2. In relation to sanctioned persons/entities

a. Services provided to sanctioned persons/entities that are allowed according to the Council Regulation EU 269/2014 of 14.3.2014

It is the view of the MoF that the provision of services to a sanctioned entity, can and only be allowed when these services are:

(i) strictly limited to what is absolutely necessary to continue to exist and

(ii) strictly limited to essential activities without which the person/entity would not be able to function legally,

The opinion of European Commission of 29.8.2019 confirms that essential services include drawing up of annual accounts, bookkeeping, declaring taxes, ensuring the administrative management (strictly limited to what is necessary to continue to exist) of a company, the payment of taxes. It is the view of the MoF that the essential services can be provided as if they are strictly of the nature aforementioned.

Also with regards to the provision of legal services, note that Article 4b of the Council Regulation 269/2014 should be interpreted in light of the fundamental rights protected under the Charter, in particular the right of defence. Accordingly, the provision of services that are strictly necessary for the exercise of the right of defense in judicial proceedings and the right to an effective legal remedy is not affected and is not subject to a derogation by the national competent authorities. 

It is noted that, if these services, later are not recognised as essential by the competent authority when examining the authorisation of payment of these services, the competent authority will not authorise the payment of the service.

b. General authorization of specific payments from sanctioned persons/entities that might be allowed according to the Council Regulation EU 269/2014 of 14.3.2014

It is the view of MoF that the release of frozen funds by a credit institution, for the payment of amounts due to public authorities namely:

   i. Tax ii. Social insurance iii. Company Registrar fees and iv. Public utilities charges.

is deemed as authorised.

The general authorization of specific payments is provided only for payments to public authorities in order to ensure that no funds will be made available to sanctioned persons with no authorisation.

The credit institutions are responsible to ensure that these amounts are paid to the public services, the amounts are reasonable and the release of funds is only allowed by way of transfer or direct debit from the account of the sanctioned person to the public authority.

The Credit Institutions are responsible to disclose to the competent authority the amounts released from sanctioned entities with the relevant evidence under this general authorisation at the end of each month. Any other amount released by the Credit Institution will be considered as making funds available to the designated person without authorisation.

3. For any other exemptions of frozen funds that might be allowed according to the Council Regulation EU 269/2014 of 14.3.2014 the credit institutions should apply to the competent authority, the Advisory Body on Economic Sanctions (ΣΕOK) following the existing procedures.

4. For applications for exemptions to the prohibitions related with the financial sector the interested persons should apply to the competent authority, the Unit for the Implementation of Sanctions in the Financial Sector (MEK) following the existing procedures. 

5. The European commission has issued Q&A in relation to sanctions adopted following Russia’s military aggression against Ukraine to the following link:


Important: This guidance is provided on an informal basis, and does not commit the Ministry of Finance. Only the Court of Justice of the EU is competent to authoritatively interpret Union law. 

   Nicosia 27.05.2022

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