NICOSIA – Sanctions imposed by the United States and the United Kingdom on wealthy Russians who have deposited their funds in Cyprus, along with their connection to Russia’s invasion of Ukraine, have profoundly impacted the new government, particularly affecting the service sector comprising accounting and law firms.

President Nikos Christodoulides, who was elected in February and previously perceived as having pro-Russian leanings, has swiftly changed course in an attempt to transform the country’s reputation as a safe haven for wealthy Russians and oligarchs.

Numerous individuals have lost their jobs, businesses have been forced to shut down, and clients of sanctioned companies have experienced the freezing of their bank accounts. These developments have led to complaints from the bar association, which views them as an overreaction, as reported by The Cyprus Mail.

“Fear breeds inaction. At this point, no one signs anything, and no one takes any action,” expressed Georgia Constantinou Panayiotou, spokesperson for the bar association, as she criticized the government’s “excessive compliance,” according to the paper.

In response to the imposed sanctions on Russia, the Finance Ministry stated that assets worth 1.2 billion euros ($1.3 billion), owned by Russian entities and managed by Cyprus-registered companies, have been frozen.

However, there appears to be some confusion as Cypriot banks have also frozen accounts belonging to clients associated with sanctioned entities, including administrative services such as trusteeship, directorship, or nominee shareholders, as reported by the paper.

This situation has led to a rush to disassociate from companies remotely linked to the sanctions, impacting both their employees and services. Panayiotou noted that companies that had engaged the services of sanctioned firms were also affected.

The Registrar of Companies and Intellectual Property, Irene Mylona-Chrysostomou, informed the Cyprus News Agency that around 500 companies have submitted applications to sever any connection with sanctioned individuals and entities.

“We are examining the matter and awaiting guidance based on the government’s decision regarding its policy on US and UK sanctions,” Chrysostomou further commented on the aftermath.