Nicosia will establish a supervisory authority to control damage inflicted on the island’s reputation as a business destination, following UK and US sanctions on Cypriot service providers.
President Nikos Christodoulides has met with stakeholders, including monetary authorities, lawyers, and accountants.
The government seeks to create a Single Supervisory Authority to get ahead of possible new sanctions and effects on the economy.
It will essentially end the existing situation where professional bodies, such as the Cyprus Bar Association or the Institute of Certified Public Accountants of Cyprus, audit liable entities.
New sanctions were imposed by the US and UK last week on Cypriot alleged ‘fixers’.
A total of 10 Cypriots and 13 foreign-born Cypriot nationals, “oligarch enablers,” have been sanctioned by the US and the UK, accused of helping pro-Kremlin Russian-sanctioned oligarchs to hide their assets following Russia’s invasion of Ukraine.
According to Kathimerini Cyprus, high-level meetings have also focused on the damage inflicted on the island’s service industry, a significant contributor to GDP.
Stakeholders are concerned over the size of the imprint of the sanctions on the service sector.
Based on 2018 data, services to international companies cover 4% of GDP with an annual contribution of €1.2 bln.
In addition, the service sector employs approximately 13,500 workers.
Industry sources cannot determine the size of the effects, which will become clear depending on the final number of Cypriot nationals and firms included on the lists.
President Christodoulides confirmed that the government expects to see more Cypriot names included in sanctions lists, either by the US, the UK, or possibly the EU.
Officials are also concerned over fallout inflicted on other customers of sanctioned firms, who have nothing to do with the violations.
Some clients of the firms involved need help carrying out their business, as their service providers have been shut out.
An issue has also emerged with the employees of the sanctioned companies not being able to receive their salaries.
Cypriot “financial fixers” were sanctioned by the UK and the USA for allegedly helping Russian oligarchs hide their assets following sanctions imposed on Moscow over Ukraine.
The latest round of restrictions connected to the Ukraine war includes asset freezes and travel bans on Demetris Ioannides and his company and Christodoulos Vassiliades.
The UK government has accused the two Cypriots of knowingly assisting the billionaire Russian oligarchs Roman Abramovich and Alisher Usmanov in hiding their assets.
Former Chelsea FC owner Abramovich is seen as a pro-Kremlin oligarch, with the EU imposing sanctions on him for allegedly benefiting from close relations with Russian President Vladimir Putin.
According to the Guardian, leaked files show that 10 of Abramovich’s secretive offshore trusts were amended to transfer the beneficial ownership to his seven children in the weeks leading up to the invasion, raising questions about whether the changes were made to shield the oligarch’s vast fortune from asset freezes.
Documents suggest the sweeping reorganisation was executed by Demetris Ioannides and his Cyprus-based company, MeritServus HC Ltd.
UK officials have also focused on the complex financial holdings of Usmanov, a Russian metals magnate, and imposed sanctions on companies and associates linked to him.
This includes Vassiliades, a Cypriot lawyer, alleged to be “at the centre of a web of trusts and offshore companies” that link Usmanov to Sutton Place, a Tudor manor in Surrey.
Vassiliades has denied having any connection to the Russian oligarch that British authorities have connected him and his law firm.