The circular No C489 on the EU Council’s Restrictive Measures and other sanctions against Russia in response to the crisis in Ukraine was issued by the Cyprus Securities and Exchange Commission (CySEC) on 25 February 2022. It ordered all regulated entities (listed below) to implement the Sanctions and Restrictive Measures issued by the council of the European Union and competent organizations against Russian entities and individuals. The Sanctions and Restrictive Measures target the Russian financial sector, members of the Russian government, members of the State Duma and other individuals close to the Russian Government (colloquially known as oligarchs).

The regulated entities must (a) ensure that the Sanctions and Restrictive Measures are implemented; (b) assess or reassess money laundering and financing of terrorism risks in all business relationships with persons subject to Sanctions or Restrictive measures; (c) avoid the commencement of any business relationship with persons subject to Sanctions or Restrictive measures;  (d) thoroughly examine the measures that must be implemented if an existing customer or business relationship is subject to the Sanctions or Restrictive Measures.

As further Sanctions or Restrictive measures may be imposed on Russia, the regulated bodies must follow the updates on Sanctions and Restrictive measures on the CySEC’s website and must take appropriate actions or measures for adequate implementation.

CySEC reminds the regulated entities that “the Restrictive Measures imposed by the EU Council along with any other European legislation or legally binding international act on Sanctions/Restrictive Measures are legally binding in their entirety for EU Member States and their citizens, with direct and immediate effect”.

The CIFs must also assess risks arising from the targeted restrictive measures and inform CySEC where these significantly affect their operations, their capital adequacy and/or the funds they hold.

Regulated Entities by CySEC:

• The Cyprus Investment Firms (CIFs)
• The Cyprus Administrative Service Providers (ASPs)
• The Undertaking for Collective Investment in Transferable Securities Management Companies (UCITS Management Companies)
• Internally managed Alternative Investment Funds (Internally managed AIFS)
• Internally managed Alternative Investment Funds with Limited Number of Persons (Internally managed AIFLNPs)
• Companies with sole purpose the management of AIFLNPs
• Crypto Asset Service Providers
• Small Alternative Investment Fund Managers (AIFMs) under Law 81(I)/2020

Circular No C489 can be found here.

The above article has been drafted by our legal intern Anaïs Bouchene, for the information of any interested party regarding the measures taken by CySEC in response to the crisis in Ukraine and does not constitute legal advice.