Most compliance officers in Cyprus watch the EU list. ICPAC's Sanctions Directive is written on the assumption that you watch three.
ICPAC issues the Directive under sections 6(2) and 25(3) of the law establishing the National Sanctions Implementation Unit (L. 150(I)/2025). Its short title is the Sanctions Directive. It binds every person ICPAC supervises by virtue of section 59(1)(d) of the AML/CFT Law (L. 188(I)/2007). Issued 22 June 2021; amended 8 May 2022, 17 July 2024 and 30 June 2026.
It defines Sanctions as the UN sanctions, the EU restrictive measures and the National Sanctions — the three that are legally binding.
Then the timing, where the Directive earns its keep. ICPAC states that absolute compliance means firms are at risk of breaching their obligations as soon as a person or entity they provide services to is listed in an EU Regulation, a UNSCR or national sanctions. Sanctions are strict liability; any person in breach is guilty of a criminal offence. Financial sanctions consist of freezing a designated person's funds and economic resources and a prohibition on making funds and economic resources available to them; once in force they override incompatible contractual agreements, including contracts entered into before the sanctions came into force.
Screening carries the same absolute register. Firms should screen all prospective and new clients, apply change-driven or scheduled screening to existing ones, and screen directors, beneficial owners, authorised signatories, powers of attorney, nominees, trustees, counterparties to agreements, and intended recipients of funds where there is reason to believe they may be subject to sanctions. ICPAC states this is an absolute obligation requiring absolute compliance, irrespective of the risk level of the client. Screening is conducted on establishment of the relationship and before any service or transaction — and whenever a new UNSCR, EU Decision or Regulation, or national sanctions of the Republic is issued, or there are additions or changes to existing lists, the entire client base is screened without delay.
The split at a true match deserves care: the two limbs are not drafted alike. For an existing client, firms must take appropriate measures to immediately freeze all services provided to the client, except services for which prior authorisation has been granted by the competent authority, and all the funds, financial assets and economic resources of the designated person the firm has in its possession, and/or refrain from executing any transaction for the benefit of or on behalf of that person. Where a business relationship has not been established yet, the firm should assess the facts, evaluate the risk, seriously consider not proceeding, and examine whether reporting to the NSIU under article 19 of the NSIU Law applies. Firms should inform ICPAC on its template, without delay, of a financial-sanctions true match on their client base, including their clients' beneficial owners, and of the actions taken.
Two provisions run against AML instinct. There is no tipping-off offence for sanctions, because designation information is public. And merely submitting a SAR or STR to MOKAS does not meet the firm's reporting obligations; identifying a designated person, or holding assets in their name, is not in itself grounds to submit one, though firms should also file where a reasonable suspicion of money laundering arises from a sanctions breach or circumvention, or on a terrorism-related true match.
Sanctions records are kept five years after the relationship ends or the occasional transaction completes, and where reasonably justified a further five, to ten. The minimum content: what triggered the match, checks taken, and who concluded a positive match was a false positive.
Which tells you what the file has to hold. A screening decision nobody documented is one you cannot show a supervisor you made.
Not legal advice. Verify against the primary source before acting.
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