Cypriot authorities are racing to help hundreds of service providing companies affected by the sanctions the United States and the United Kingdom (UK) have recently introduced against Russia, an official said Friday.
Registrar of Companies Irini Mylona told state-run CyBC radio that about 600 Cypriot companies who have no connection whatsoever with Russian firms had their bank assets frozen, because they buy services from or were under the management of the two Cypriot companies on the sanctions list.
The U.S. and the UK announced separately in early April that they had imposed sanctions on “financial fixers” who had allegedly helped Russian oligarchs Roman Abramovich and Alisher Usmanov, allegedly close collaborators of Russian President Vladimir Putin, to hide their assets.
Among those sanctioned were two Cypriot legal entities — a law firm and an audit company, and their managers. They are not covered by the European Union’s (EU) sanctions rules, which are already being applied by the Cypriot authorities.
Upon the announcement of the sanctions, Cypriot commercial banks, which rely on the U.S. dollar for their international transactions, immediately froze the accounts of the two Cypriot companies, as well as those managed by the two sanctioned entities or their directors.
As a result, around 600 companies could not make any transactions or pay their employees, and they were forced to lay off several hundred workers.
Mylona said her office had received instructions from the Finance Ministry to help the trapped companies replace their personnel with people unrelated to the two sanctioned entities.
She said the issue was quite serious as it threatened to bring to a standstill the country’s thriving services sector, which contributes about 10 percent to Cyprus’ annual gross domestic product. In 2022, it is estimated to have amounted to just over 27 billion euros (29.19 U.S. dollars).
“These companies will receive a clean bill certification from the Registrar, which they will forward to the banks and thus proceed with unfreezing their accounts,” Mylona said.
She added that the whole process could take about a week.
When commenting on the issue, Cyprus’ President Nicos Christodoulides said the government was determined to do whatever it takes to protect the services sector as it was a key sector of the economy.
