The National Sanctions Implementation Unit (EMEK): Roles, Powers And Derogation Procedures

Introduction

On 25 July 2025, the Law on the Establishment of the National Sanctions Implementation Unit (EMEK) was published in the Official Gazette of the Republic of Cyprus. Through this legislative initiative, Cyprus strengthens its institutional compliance with sanctions regimes imposed by international and regional organisations by establishing a new central body the National Sanctions Implementation Unit (EMEK).

The Core Responsibilities of EMEK

According to Article 3 of the Law, EMEK assumes a central role in the enforcement, oversight, and monitoring of sanctions within the Republic. Its key functions include:

• Apply and supervise EU restrictive measures and UN Security Council sanctions relating to financial sanctions.
• Issuing opinions, recommendations and instructions to competent authorities and stakeholders on the implementation of sanctions.
• Assessing cases of potential sanction breaches.
• Imposing administrative fines, without prejudice to the powers of other competent supervisory authorities.

Additionally, EMEK is tasked with representing the Republic in domestic, European and international bodies, and collaborating with foreign competent authorities.

Licenses and Derogations from Financial Sanctions

A noteworthy mechanism under the new legislation is the ability to request a license or derogation from the application of sanctions, as outlined in Article 9. This mechanism is expected to help balance strict enforcement with avoiding disproportionate effects in exceptional cases.

Whilst the law does not explicitly define the grounds under which a derogation may be requested, it is expected that EMEK will issue guidance notes to promote consistency and transparency. In practice, such applications will be assessed on an ad hoc basis.

If an application is rejected, EMEK must provide a reasoned decision to the applicant. In the event of rejection, the applicant has the right to file a hierarchical appeal before the Minister, within twenty (20) days from the notification of the decision, under Article 12. If the Minister's decision is also negative, the applicant may file an administrative recourse before the Administrative Court, pursuant to Article 146 of the Constitution.

Establishment of the Sanctions Advisory Committee

The law also provides for the formation of a Sanctions Advisory Committee, which serves as a consultative and supporting body to EMEK. It is chaired by the Head of EMEK (or their delegate) and composed of representatives from the Ministry of Foreign Affairs, Ministry of Justice and Public Order, Central Bank of Cyprus, CySEC, Law Office of the Republic, Department of Registrar of Companies and Intellectual Property, Customs Department, Cyprus Police and MOKAS. EMEK may, when appropriate, invite members of the Advisory Committee to provide expertise on specific issues arising from the implementation of sanctions.

Obligations for Regulated Entities & Consequences of Non-Compliance

Article 25 introduces a clear obligation for all regulated entities to adopt and maintain adequate policies, controls, systems and procedures that effectively manage the risks associated with sanctions breaches.

The strictness of the framework is reinforced under Article 27, which stipulates that any failure to comply with Article 25 may result in the imposition of administrative fines of up to €500,000. In the case of continued non-compliance, additional daily fines of up to €500 per day may apply.

Conclusion

The establishment of EMEK and the introduction of a centralised sanctions coordination framework represent a significant institutional reform for the Republic of Cyprus. This new structure is expected to enhance transparency, accountability, and the country's international credibility contributing to the effective implementation of international sanctions and the safeguarding of the integrity of Cyprus's financial system.

Professionals and businesses must now exercise heightened diligence in managing their obligations under this new regime. Special care is required when submitting derogation applications or when assessing clients and transactions that may fall within the scope of restrictive measures, as compliance has become a legal obligation backed by stringent penalties.

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.