CySEC Orders CIFs to Ensure Restrictions on Sanctioned Russians

CySEC companies need to comply with the orders of the EU.

They need to inform the regulator about the preventive measures by March 3.

In a circular published last week, the Cypriot regulator asked the Cyprus Investment Firms (CIFs) and other regulated entities to ensure the implementation of sanctions and restrictive measures that were imposed by the European Union in response to the Russian invasion in Ukraine.

Cyprus is home to several financial services companies. The friendly regulations of the jurisdiction make it a suitable base for the companies that are offering services to customers in the European Union.

These Cypriot businesses need to assess or reassess money laundering and financing of terrorism risks in all business relationships with sanctioned persons. Further, these firms cannot commence any new business with these sanctioned entities and need to examine and implement the measures for existing customers.

A Barrage of Economic Sanctions

After the Russian military began its invasion of Ukraine on President Putins order, many western countries, including the US, the UK and the EU, sanctioned Russian politicians, officials, oligarchs, financial institutions and other companies.

The sanctions on the individuals mostly include travel bans and asset freezes. “Implement appropriate actions/measures and/or freeze immediately all funds and/or economic resources that are held, administered or managed on their behalf or on behalf of other persons associated with the business relationship,” CySEC ordered.

All the regulated Cypriot companies supervised by the financial markets regulator need to report their actions against the sanctioned individual and entities by March 3, 2022.

“Furthermore, CySEC expects Cyprus Investment Firms (CIFs) to assess the risks arising from the targeted restrictive measures and where these significantly affect their operations, their capital adequacy and/or the funds they hold, either on their own or on behalf of their customers, to inform CySEC,” the regulator added.

Meanwhile, western governments decided to block access to the SWIFT messaging network for ‘selected Russian banks’, which is considered to be the most strict form of economic sanction that can be imposed. However, the names of these banks have not been disclosed yet.