New Bill Clarifies Central Bank of Cyprus' Role in Enforcing EU Legal Acts and Sanctions

A newly introduced bill in the House aims to clarify the Central Bank of Cyprus’ (CBC) role as the competent authority for implementing European Union (EU) legal acts and imposing administrative sanctions and measures on its supervised entities in cases of violations.

Under the proposed legislation, which was discussed this week by the House plenum, the Finance Minister will have the authority to designate the CBC as responsible for the application of EU acts. This designation will align with recommendations from the European Central Bank (ECB) and will pertain only to legal acts relevant to the existing duties and responsibilities of the CBC, without assigning it new tasks.

Specifically, the amendments to the ‘Law on the Central Bank of Cyprus’ will enable the Minister of Finance to issue notifications in the Official Gazette of the Republic. These notifications will authorise the CBC to act as the competent authority for implementing any EU Regulation or Decision related to its current responsibilities. The proposed regulations also empower the CBC to impose administrative sanctions and measures as stipulated by the relevant EU Regulations or Decisions.

The bill was developed in collaboration with the CBC following the issuance of a reasoned opinion by the European Central Bank (ECB). Moreover, no consultation with stakeholders was conducted, as the Finance Ministry noted that the bill pertains to directly applicable EU acts.

The ECB’s opinion, received in February 2023, accompanies the bill. It noted that the authority granted to the Finance Ministry to designate a competent authority for implementing EU legal acts stems from the constitution of the Republic of Cyprus, which provides for the general executive powers of Cabinet members concerning their respective ministries.

The ECB understands that under Cypriot law—unless specified otherwise by law, regulatory administrative act, or executive decision—each ministry and independent service is responsible for ensuring the implementation of EU regulations and decisions within their jurisdiction according to the constitution, laws, regulatory acts, and executive decisions.

Furthermore, according to Cypriot legislation, the ECB understands that the bill pertains only to EU regulations and decisions relevant to the existing tasks and responsibilities of the CBC. It is clarified that, based on the above and assuming that the CBC’s designation as the competent authority is limited to EU legal acts related to its existing tasks and responsibilities, the bill does not assign any new duties to the CBC.

Regarding the designation of the CBC as the national authority responsible for the application and enforcement of EU sanctions, the ECB requests clarification on the types of EU legal acts covered by the general term “EU acts.” Furthermore, for legal certainty and transparency, the ECB also recommended amending the wording of the bill’s provision authorising the Finance Minister to designate the CBC as the competent authority for implementing EU acts. It was also noted that the wording should explicitly state that this task will only cover EU legal acts relevant to the existing duties and responsibilities of the CBC.

The ECB also suggested amending the bill’s provision that authorises the CBC to impose administrative sanctions and measures as specified in EU legal acts, in order to provide consistency. The amendment should explicitly clarify that these can be applied within the limits set by EU and national law, to the extent relevant to the CBC’s duties and responsibilities.

By fLEXI tEAM