On Thursday, July 10, the Parliament of Cyprus officially approved the establishment of a National Financial Sanctions Unit, a specialized body operating within the Ministry of Finance. This is an important step in fulfilling the Republic of Cyprus's international obligations as a member state of the European Union.
Although the law was passed late, it received maximum support.
Although the European Union set the deadline for implementing the new rules as May 20, 2025, Cyprus only passed the relevant law in July. Nevertheless, the government's proposed bills were supported by a majority of the House of Representatives, allowing the reform to move forward.
What will the new unit do?
The National Financial Sanctions Unit will have centralized functions for coordinating, monitoring, and implementing sanctions policy in the country. Its tasks include:
- Monitoring and freezing the financial assets of individuals and legal entities subject to EU or UN sanctions
- Developing guidelines, recommendations, and clarifications for other ministries, government agencies, banks, and the private sector
- Assessing risks, analyzing financial flows, and identifying potential schemes to circumvent sanctions
- The unit will also participate in international investigations and maintain partnerships with foreign agencies.
New tools and expanded powers
The adopted law not only provides for the creation of a separate unit, but also for tough measures to combat sanctions evasion. These measures include:
- Introducing criminal liability for violating the sanctions regime
- The possibility of imposing significant administrative fines on private and public entities that fail to provide the necessary information.
- Mandatory data exchange with foreign state and supranational entities
- Establishment of legal safeguards for whistleblowers reporting potential violations
There are different views in Parliament
DIKO MP Christiana Erotokritou said that adopting the law is of paramount importance for Cyprus's international reputation. She stressed that, until now, the Republic of Cyprus has often been perceived as a weak link in Europe's efforts to combat financial irregularities and sanctions evasion.
However, critical comments were also made. Independent MP Costas Efstathiou pointed out that the current version of the bill lacks clear appeal mechanisms, which could create legal uncertainty for individuals mistakenly included on lists of violators.
The move towards greater financial transparency
The adopted measures are part of Cyprus's broader strategy to strengthen financial sector supervision, comply with international standards, and rebuild the confidence of the EU, the US, and international financial institutions. In the coming months, work will begin on establishing the organizational structure of the new agency, recruiting staff, and drafting the first regulations. The agency is expected to be fully operational by the end of 2025.