24 April 2024

Navigating The 12th EU Sanctions Package: Reporting Requirements For Outgoing Fund Transfers

Elias Neocleous & Co LLC


Elias Neocleous & Co LLC is the largest law firm in Cyprus and a leading firm in the South-East Mediterranean region, with a network of offices across Cyprus (Limassol, Nicosia, Paphos), Belgium (Brussels), Czech Republic (Prague), Romania (Budapest) and Ukraine (Kiev). A dynamic team of lawyers and legal experts deliver strategic legal solutions to clients operating in key industries across Europe, Asia, the Middle East, India, USA, South America, and China. The firm is renowned for its expertise and jurisdictional knowledge across a broad spectrum of practice areas, spanning all major transactional and market disciplines, while also managing the largest and most challenging cross-border assignments. It is a premier practice of choice for leading Cypriot banks and financial institutions, preeminent foreign commercial and development banks, multinational corporations, global technology firms, international law firms, private equity funds, credit agencies, and asset managers.
On 16 April the Ministry of Finance made an announcement regarding the imposition of a new reporting obligation, pursuant to the recent 12th EU sanctions package against Russia.
European Union International Law
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On 16 April the Ministry of Finance made an announcement regarding the imposition of a new reporting obligation, pursuant to the recent 12th EU sanctions package against Russia.

In particular, according to the new article 5r of EU Council Regulation 833/2014, a new requirement is introduced to notify, on a quarterly basis, the national competent authorities of EU member states about outgoing transfers of funds out of the EU which relate to Russian-owned entities, defined below.

The national competent authority in the case of Cyprus is the Ministry of Finance and obliged persons shall need to report to the following email:

Relevant reporting shall need to be made by credit and financial institutions (that have initiated the relevant transfers of funds mentioned above) and also by the relevant EU-established legal persons, entities and bodies for which more than 40% of ownership may (directly or indirectly) be attributed to:

  • a legal person, entity or body established in Russia or
  • a Russian national (even those with a dual citizenship, inclusive of EU nationals) or
  • a natural person residing in Russia.

Reporting should take aggregate ownership into account.

Obliged entities shall need to report on all types of outgoing transfers, anywhere outside of the EU and in any currency, and this will have to include transfers for repatriation of profits.

In this regard, all types of funds, defined as financial assets and benefits of every kind, are covered by this new requirement.

It is noted that Article 5r:

  1. covers transfers of funds out of accounts at a branch of an EU credit or financial institution or an EU operator located outside the EU
  2. does not cover transfers of funds out of accounts at a subsidiary of an EU bank or an EU operator located outside the EU

The reporting obligation applies when the accumulated transfers made by the relevant legal person, entity or body exceed EUR100.000 over the relevant reporting period.

The first reporting by the obliged persons shall cover the first quarter of 2014 (the period between 1 January and 31 March 2024) and the obligation for submission arises on 1 May 2024.

Thereafter, submission must be made within two weeks from the end of the relevant quarterly period, hence for the second quarter of 2024 submission must be made by 15 July 2024, while for the third quarter of 2024 submission will have to be made by 15 October 2024 and so on.

For the quarterly reporting purposes, the EU Commission recommends the use of a particular reporting template which it has published, but the relevant entities and EU banks are free to use their own template.

It is stressed that the obliged credit and financial institutions are in no way exempted from their obligation to submit their quarterly reports in the event that the relevant entity has filed its own report.

Pursuant to the above, obliged entities shall need to calculate any qualifying amounts transferred, in order to establish whether the EUR100.000 threshold mentioned above is met and, if yes, ensure that the correct amounts are reported.

In conclusion, this new reporting obligation necessitates stringent monitoring and reporting of outgoing transfers by legal entities, entities and bodies meeting the relevant 40% ownership requirement. With a focus on transparency and compliance, the obliged entities must adhere to the prescribed reporting guidelines to ensure effective implementation of the regulation and mitigate potential risks associated with fund transfers.

Providers of fiduciary services to such obliged entities will also have to go through their clientele to determine which clients have the relevant obligation to report, and inform them of this obligation accordingly. Compliance with these requirements, including accurate calculation and timely submission of reports, is essential for navigating the evolving regulatory landscape and upholding financial integrity within the EU.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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