• The draft Establishment of the National Sanctions Implementation Unit Law (the NSIU Bill), which would overhaul the existing enforcement apparatus in Cyprus, seeking to reinforce the relevant authorities investigatory powers and powers to take administrative measures.
• The draft Criminalisation of Violation of Restrictive Measures Law (the Sanctions Enforcement Bill), which implements EU Directive 2024/1226, a European directive seeking to harmonise the criminal offences and penalties imposed for the violation of EU restrictive measures (sanctions).
• The draft Amendments to the Whistleblowing Law, to include a reference to the Sanctions Enforcement Bill.

The NSIU Bill seeks to establish a National Sanctions Implementation Unit (NSIU) as a new department within the Finance Ministry, which will supervise all sanctions related issues in Cyprus. In this respect, the tasks of both the Sanctions Implementing Unit in the Financial Sector (MEK) and Advisory Committee on Economic Sanctions (SEOK) will be transferred to the NSIU.

Under the NSIU Bill, the NSIU will have a wide range of responsibilities and powers. The most important of these are as follows:

• The NSIU will be responsible for assessing all sanctions licensing applications. In this respect, the NSIU Bill expressly acknowledges that applications in English are permitted. Further provisions stipulate that the supporting documents would, under this regime, need to be originals or certified copies.
• The NSIU will have the extended power of issuing directives, circulars and guidance. This represents a welcome development for market participants looking for guidance on common issues.
• Notably, the NSIU will now be granted certain enforcement-related powers:
  
  • The NSIU will be able to request information, noting that such requests will be subject to usual administrative law requirements, such as the need to be in writing, be justified and should specify the purpose of such request and the connection to NSIU’s functions under the legislation.
  • The NSIU will have the power to investigate cases of possible sanctions violations.
  • The NSIU will also have the power to impose administrative fines for failure to comply with the provisions of the NSIU Bill, most notably centering around the obligation to provide information. Fines in this respect can go up to EUR 100,000. It is relevant to note that the disclosure of information covered by the legal professional privilege is excluded in this respect.

Further significant provisions under the NSIU Bill include the following:

• A general obligation to report frozen assets and / or assets that should have been frozen.
• An obligation on ‘obliged entities’ (equivalent to the AML definition in this respect) to adopt and apply adequate and appropriate policies, controls, systems in relation to sanctions.
• The Council of Minister will have the power to impose national sanctions in certain circumstances.

In particular, the Sanctions Enforcement Bill seeks to transpose the relevant provisions of Directive 2024/1226.

It is relevant to note that Cypriot law already treats the violation of EU restrictive measures to be a criminal offence, punishable by imprisonment or a fine or both those penalties. It is expected however that the Sanctions Enforcement Bill will significantly strengthen the consequences of non-compliance. Most notably, the Sanctions Enforcement Bill:

• Proposes significantly tougher penalties for sanctions violations, including fines of up to EUR 40 million and prison sentences of up to five years.
• Sets out the territorial scope of the law and provisions determining which actions constitute crimes and the aggravating and mitigating circumstances.

For completeness, the Sanctions Enforcement Bill would repeal the current Cyprus sanctions legislation, being the Provisions of United Nations Security Council Resolutions or Decisions (Sanctions) and Council of the European Union Decisions and Regulations (Restrictive Measures) Law 2016.

Although the public consultation on the Draft Package ended in January 2025, no updated version has been published since. It is anticipated that the passing of the Draft Package will occur soon, noting the transposition deadline of 20 May in the EU Directive 2024/1226.

Stakeholders are monitoring the situation closely, as the Draft Package represents an important upgrade to Cyprus’ sanctions compliance landscape.

The Directive (EU) 2024/1226 can be found here.