Cyprus labours to shield reputation amid new US, UK action on Russian ‘sanctions evasion network’

“We are not trying to target Cyprus, or Cypriot persons, or entities,” Fisher said. “What we are trying to do is go after networks. We are going after oligarchy networks, Kremlin-controlled networks and those that are enabling the illicit finance regime, the money laundering, the sanctions evasion.”

Networks or not, sanctioning Cypriot individuals and business was another blow to the island’s reputation. Finance Minister Makis Keravnos said there was an upside in that it affords authorities an opportunity to clean house.

Keravnos said the government sees this as “an opportunity to clear Cyprus’ name once and for all”. Cypriot authorities have requested, and received, detailed information from Washington and London about Cypriot individuals and legal entities on the list to determine whether they also evaded EU sanctions. That probe is still ongoing, with Attorney-General George Savvides saying little to nothing because “our country’s credibility is at stake”.

Some of these Cypriot enablers are lawyers and accountants that US and UK authorities allege help shuffle assets for Russian oligarchs through a web of trusts and shell companies.

Both the Cyprus Bar Association, which regulates 4,362 lawyers and 1,963 companies as well as the Institute of Certified Public Accountants of Cyprus (ICPAC) which counts 5,700 members and some 1,100 licensed entities, have told The Associated Press that they have in place robust supervisory procedures – including on-site inspections — to ensure their members comply with sanctions regimes.

A corollary problem triggered by the sanctions affected scores of employees at more than 600 companies where payrolls were stopped when Cypriot banks froze their accounts. Some of these companies are law offices, trusts or involved in a broad range of business activity such as real estate, marine, aviation and secretarial services.

It is unclear exactly how many workers have been left in the lurch because many of these companies employ no more than a skeleton administrative staff.

Nonetheless, it is understood many remain unpaid weeks after the sanctions announcement, despite a government decision to unfreeze accounts and “normalise” a situation that Keravnos conceded had unsettled the financial services sector.

Registrar of Companies Irene Mylona-Chrysostomou told the AP that the way this works is by replacing the directors of a company whose boss is on the sanctions list. Banks would then unfreeze accounts to the new, unencumbered “directorship”.

Mylona-Chrysostomou said “most” of the companies affected by the Apr 12 announcement have changed their directors. Her organisation is in the process of making those changes to a few hundred more affected by the May 19 announcement.

Whatever the impact on the Cypriot economy from a flight of Russian business, authorities are banking on the island nation’s resilience to weather the storm, just as it did following the 2013 financial crisis.