In relation to the above, the announcement of the Ministry of Finance (MoF) on 14.03.2022 and in anticipation of formal guidance by the European Commission on specific issues regarding the effective implementation of the measures, the working group has gathered numerous inquiries from market participants. The MoF is providing below some preliminary guidance on selected specific issues.
It should be recalled that the following should not be construed as overriding the authoritative guidance that the European Commission is expected to provide.
1. In relation to non-sanctioned persons/entities
a. Legal persons, entities or bodies established in Russia
Regarding the Council Regulation (EU) 2022/328 of 25.2.3022 amending the existing Council Regulation (EU) 318/2014 of 27.3.2014 and particularly in article 5 there is extensive use of the term "legal persons, entities or bodies established in Russia".
It is the view of the MoF that the definition of entities established in Russia refers only to entities incorporated or registered under the laws of Russia including their branches. Therefore legal persons, entities or bodies incorporated or registered in any other country other than Russia are not captured by the Regulation. The latter includes companies for example registered or incorporated in
Cyprus under Cyprus Law operating from Cyprus internationally irrespective of the fact that a company might be of Russian Interest. Of course, this does not apply to sanctioned physical and legal persons or entities.
b. Prohibition of accepting deposits from Russian nationals or natural persons residing in Russia, or legal persons, entities or bodies established in Russia, more that 100K per person per credit institution
It is the view of MoF that the prohibition of accepting deposits more than 100K per person per credit institution should not apply in the cases that the amounts are intended for the repayment of own liabilities (eg. loans, current accounts).
2. In relation to sanctioned persons/entities
a. Services provided to sanctioned persons/entities
It is the view of the MoF that the provision of services to a sanctioned entity, can and only be allowed when these services are:
(i) strictly limited to what is absolutely necessary to continue to exist and
(ii) strictly limited to essential activities without which the person/entity would not be able to function legally,
The opinion of European Commission of 29.8.2019 confirms that essential services include drawing up of annual accounts, bookkeeping, declaring taxes, ensuring the administrative management (strictly limited to what is necessary to continue to exist) of a company, the payment of taxes. It is the view of the MoF that the essential services can be provided as if they are strictly of the nature
It is noted that, if these services, later are not recognised as essential by the competent authority when examining the authorisation of payment of these services, the competent authority will not authorise the payment of the service.
b. General authorization of specific payments from sanctioned persons/entities
It is the view of MoF that the release of frozen funds by a credit institution, for the payment of amounts due to public authorities namely:
1.Tax 2. Social insurance 3. Company Registrar fees and 4. Public utilities charges.
is deemed as authorised
The general authorization of specific payments is provided only for payments to public authorities in order to ensure that no funds will be made available to sanctioned persons with no authorisation.
The credit institutions are responsible to ensure that these amounts are paid to the public services, the amounts are reasonable and the release of funds is only allowed by way of transfer or direct debit from the account of the sanctioned person to the public authority.
The Credit Institutions are responsible to disclose to the competent authority the amounts released from sanctioned entities with the relevant evidence under this general authorisation at the end of each month. Any other amount released by the Credit Institution will be considered as making funds available to the designated person without authorisation.
3. For any other exemptions of frozen funds that might be allowed according to the Council Regulation EU 269/2014 of 14.3.2014 the credit institutions should apply to the competent authority, the Advisory Body on Economic Sanctions (ΣΕOK) following the existing procedures.
4. For any other applications for exemptions to the prohibitions related with the financial sector the interested persons should apply to the competent authority, the Unit for the Implementation of Sanctions in the Financial Sector (MEK) following the existing procedures.
Important: This guidance is provided on an informal basis, and does not commit the Ministry of Finance. Only the Court of Justice of the EU is competent to authoritatively interpret Union law.
You can read the official announcement of the Ministry of Finance here