Assets of persons in UK-US sanctions list frozen, BoC Compliance Officer confirms

Cypriot individuals and entities included in UK and US sanctions list will see their assets in the Cypriot banking system frozen and will not be able to carry out any banking transaction in Cyprus, Marios Skandalis, Chief Compliance Officer of Bank of Cyprus (BoC), the island’s largest lender, has said.

Last week US Department of Treasury and the UK Foreign Office imposed sanctions on Cypriot individuals and legal entities in connection "with the Russian Federation’s unlawful and unprovoked invasion of Ukraine, including facilitators of sanctions evasion."

Speaking to CNA, Skandalis recalled that the Cypriot banking system voluntarily implements sanctions imposed by both the US and the UK as “a step further” in a move which has been rewarded with the increase of correspondent banks clearing transactions in US dollars from one to four.

He explained that Cypriot banks could opt not to implement US and UK sanctions but only those of the EU and the UN but wondered what would that mean for the Cypriot economy if correspondent banks could not proceed with clearing transactions in US dollars creating problems to the economy.

“We are not simply a European state, but rather a state that adopts best practises in the field of combating financial crime,” Skandalis said.

The Bank of Cyprus compliance chief said that "after the imposition of sanctions mainly by the US or the UK on any persons be it natural or legal persons, their assets in the Cyprus banking system are frozen."

That is, he explained, "the money will not be returned to this person while his bank accounts are not closed until clarified by the respective authorities which issued the sanctions regarding what will happen with these assets."

Skandalis pointed out that the Ministry of Finance’s Advisory Committee on Economic Sanctions (SEOK), which is the competent body on sanction implementation, will determine the next steps.

“If SEOK ascertains that a certain person has no connection with the sanctions and if US secondary sanctions are not violated, perhaps the committee will decide to close the accounts and return the funds to a bank a certain person has abroad.”

As he noted, secondary sanctions imposed by the US concern persons or entities which possibly indirectly facilitate the transactions of a person included the sanctions list not just in US dollars.

Skandalis said that Cypriot persons and entities included in the sanctions lists cannot engage in any transaction with the Cypriot banking system.

“Adherence to the sanctions either of the UK or the US is implemented by the Cypriot banking system as whole,” he said.

Replying to a comment that lawyers say there are is no proof that these persons were involved in sanctions evasion, Skandalis said that this should be examined.

“If there is any mistake, the authorities involved will rectify it. But as long as (these persons) are included in the sanctions list, the banks cannot do anything else,” he went on to say.

Since the 2013 financial crisis, the Cypriot banking system has closed thousands of accounts with foreign clients, while relationships with hundreds of client introducers were severed.

Source: CNA