Case C-81/24, LH v OTP banka d.d. (Judgment of 11 June 2026)

Introduction

On 11 June 2026, the Court of Justice of the European Union (“CJEU”) delivered an important judgment on the relationship between consumers’ right to access a payment account with basic features and the anti-money laundering (“AML”) obligations imposed on credit institutions.

In Case C-81/24, LH v OTP banka d.d., the Court held that Article 16(4) of Directive 2014/92 does not permit Member States to require credit institutions to refuse an application for a payment account with basic features solely because the applicant is included on a sanctions list maintained by a third country. Instead, institutions must carry out an individual assessment of the money laundering and terrorist financing risks associated with the proposed business relationship. A refusal is justified only where those risks cannot be effectively managed through measures proportionate to the institution’s nature and size.

The judgment provides important guidance on how the EU AML framework interacts with consumers’ right to access essential banking services.

Background

The proceedings arose after a Slovenian bank refused to open a payment account with basic features for an individual whose name appeared on a sanctions list maintained by the United States Office of Foreign Assets Control (OFAC). Although the applicant had never been convicted of the relevant criminal offence and was not subject to restrictive measures imposed by the United Nations, the European Union or Slovenia, the bank refused the application.

The Slovenian court referred questions to the CJEU concerning the interpretation of Directive 2014/92/EU on payment accounts and Directive (EU) 2015/849 on the prevention of money laundering and terrorist financing. Having answered the first question, the Court found it unnecessary to address the remaining questions concerning the absence of criminal convictions or the presumption of innocence.

The legal framework

Directive 2014/92 grants consumers legally resident in the European Union the right to open and use a payment account with basic features. However, Article 16(4) requires Member States to ensure that credit institutions refuse an application where opening the account would result in an infringement of the AML provisions contained in Directive 2015/849.

The Court also recalled that Recital 34 of Directive 2014/92 makes clear that AML legislation must not be used as a pretext for rejecting commercially less attractive consumers. Similarly, Recital 47 states that refusal is justified only where the consumer does not comply with AML legislation, and not because compliance procedures are considered too burdensome or costly.

Directive 2015/849 requires credit institutions to identify and verify customers, assess the risks associated with the proposed business relationship and apply customer due diligence measures proportionate to those risks. Depending on the level of risk identified, institutions may be required to apply enhanced customer due diligence.

The Court’s Judgment

Inclusion on an OFAC List does not automatically justify refusal

The central issue before the Court was whether inclusion on an OFAC sanctions list automatically justified refusing to open a payment account with basic features. The CJEU answered that question in the negative. The Court held that inclusion on an OFAC list (or on any comparable list established by a third country) may constitute a relevant risk factor in assessing money laundering and terrorist financing risks.

However, that fact alone does not automatically prevent a credit institution from establishing a business relationship. Accordingly, Article 16(4) of Directive 2014/92 does not permit Member States to require credit institutions to refuse an application solely because the applicant appears on such a list.

Instead, institutions must carry out an individual assessment of the proposed business relationship, taking into account all relevant risk factors. Where that assessment identifies a higher risk of money laundering or terrorist financing, the AML Directive requires enhanced customer due diligence. However, the Court emphasised that the identification of a higher-risk customer is not automatic and must itself result from an evidence-based assessment.

Refusal may still be justified

The Court recognised that, following an individual assessment, a credit institution may conclude that it is unable to manage effectively the identified money laundering or terrorist financing risks through measures proportionate to its nature and size, even where the proposed relationship concerns only a payment account with basic features. Only in those circumstances may a refusal be justified under Article 16(4).

The Court therefore left it to the Slovenian court to determine whether the bank had carried out the required individual assessment, taking into account all relevant risk factors beyond the applicant’s inclusion on the OFAC list, and whether the identified risks could have been managed through proportionate measures, including ongoing monitoring of the business relationship under Article 13(1)(d) of Directive 2015/849.

The nature of basic payment accounts

The Court also observed that the limited functionality of payment accounts with basic features may reduce the money laundering and terrorist financing risks associated with such accounts. Nevertheless, this remains only one element of the institution’s overall assessment and does not prevent refusal where the identified risks cannot be effectively managed.

Practical Implications

The judgment confirms that financial institutions cannot adopt blanket policies under which customers appearing on third-country sanctions or watch lists are automatically denied access to payment accounts with basic features.

Instead, institutions should ensure that:

• sanctions screening informs, rather than replaces, the individual AML risk assessment;
• enhanced customer due diligence is applied where justified by the identified risks;
• decisions refusing an application are supported by a documented, evidence-based assessment of all relevant risk factors; and
• consideration is given to whether ongoing monitoring of the business relationship would enable identified risks to be effectively managed.

Conclusion

The CJEU’s judgment confirms that inclusion on a third-country sanctions list is only one factor in the assessment required under Directive 2015/849. It cannot, by itself, justify refusing a payment account with basic features. Instead, credit institutions must carry out an individual, evidence-based assessment of the proposed business relationship and determine whether any identified money laundering or terrorist financing risks can be effectively managed through measures proportionate to their nature and size. The decision reinforces both the EU’s risk-based AML framework and the objective of ensuring access to essential banking services under Directive 2014/92. For more information please contact our Compliance team at compliance@demetriades.com or your usual contact at Chrysses Demetriades & Co LLC.

The Ministry of Finance of the Republic of Cyprus issued Circular No. 1780 on 8/1/2026, setting out the framework for the application of the Cost of Living Allowance (COLA), aka A.T.A., for the period 1 January 2026 to 30 June 2027 in the public sector.

The Circular is based on the agreement on the reinstatement of the Automatic Price Indexation mechanism and on the confirmation of positive economic growth during 2025. Under the Circular, COLA is applied as follows:

• 1 January 2026 – 30 June 2026: COLA is payable at 80% of the annual increase of the relevant Consumer Price Index for 2025.
• 1 July 2026 – 30 June 2027: COLA increases to 90% of the same annual CPI increase, provided that the annual change in real GDP for 2025 is positive, as confirmed in the Circular.

The Circular further specifies the exact adjustment percentages applied to basic salaries, distinguishing between cases where COLA is already incorporated into the salary base and those where it is not, and sets out maximum monetary caps for the application of the allowance. The revised COLA amounts are taken into account for the purposes of future salary calculations, in accordance with the applicable rules.

Circular No. 1780 serves as a practical reference for public-sector payroll authorities and other competent bodies and requires careful application depending on the salary structure concerned.

For more information, please contact Thomas Christodoulou (thomas.christodoulou@demetriades.com) or your usual contact at Chrysses Demetriades & Co LLC.

In two decisions delivered in early December 2025 (Α. ΕΡΓΟΛΗΠΤΙΚΗ ΕΤΑΙΡΕΙΑ ΓΙΑΝΝΑΚΗΣ ΓΙΑΝΝΗ ΣΥΜΕΟΥ & ΥΙΟΙ ΛΤΔ v. ΔΗΜΗΤΡΗ ΣΑΒΒΑ, Civ App. 266/2017, 2/12/2025 and ΑΛΕΞΗ ΑΛΕΞΑΝΔΡΟΥ ν. ΓΕΩΡΓΙΟΣ ΑΛΕΞΑΝΔΡΟΥ (ΚΑΛΑΜΟΥΔΙΑΣ) ΛΤΔ Civ App.301/2015,1/12/2025), the Supreme Court of Cyprus revisited key principles governing liability for workplace accidents in the construction sector. The cases concerned injuries sustained during construction activities and required the Court to assess the respective responsibilities of employers and employees where safety arrangements on site were found to be inadequate.

The Court confirmed that construction sites present heightened risks and therefore demand a structured and effective approach to health and safety. Particular attention was given to situations involving subcontractors or external specialists, who may not be fully embedded in the main contractor’s safety procedures. The judgments underline that those in control of a site cannot rely on the experience or autonomy of such workers as a substitute for clear instructions, proper coordination and an organised system of work addressing foreseeable hazards.

While deficiencies in safety management were identified, the Court also examined the conduct of the injured workers. In both cases, the employees were found to have contributed to their accidents by failing to take reasonable precautions in circumstances where the risks were apparent. As a result, contributory negligence was assessed at 25%. The Court emphasised that employees are expected to exercise judgment and care consistent with their experience and the nature of the work being performed.

At the same time, the Court reaffirmed that an employee’s failure to act prudently does not displace the employer’s overarching duty to ensure a safe working environment. That duty encompasses multiple elements, including the design of safe work systems, the provision of suitable equipment, competent supervision and safe premises. The decisions confirm that, in practice, where shortcomings in workplace safety remain the dominant cause of an accident, liability will generally rest with the party controlling the site, with contributory negligence typically reflected through a moderate reduction in damages rather than a transfer of responsibility.

Our Experience in Workplace Accident Litigation

Our firm has also successfully represented defendants in complex workplace accident litigation before the Cyprus courts, including Action No. 4005/2015 before the District Court of Limassol, where judgment was delivered on 19 November 2024.

The case concerned a claim for damages arising from an alleged workplace accident at a construction site, involving multiple defendants, including an employer and a subcontractor. The claimant alleged that he had been instructed to operate machinery outside his usual duties and sustained serious injuries when dismounting from a tractor.

The Court undertook a detailed analysis of the factual matrix, including the credibility of witnesses, the allocation of responsibilities between contractors and subcontractors, and the extent of any alleged breach of statutory and common law duties. Particular emphasis was placed on inconsistencies in the claimant’s evidence and the absence of reliable proof supporting key aspects of his account.

Importantly, the Court rejected significant parts of the claimant’s testimony as unreliable and internally contradictory, while also scrutinising allegations that he had been instructed to perform tasks beyond his role. The decision illustrates the Court’s willingness to closely examine evidential credibility and to dismiss claims where negligence is not adequately established.

The action was ultimately resolved in favour of our client, reaffirming the principle that liability in workplace accident cases must be grounded in clear, credible evidence of breach and causation, and not merely on the occurrence of an accident.

For more information, please contact Costas Georgiades or your usual contact at Chrysses Demetriades & Co LLC.

Balancing environmental protection, cultural heritage and development is no longer a theoretical exercise; it is fast becoming a defining challenge for courts and policymakers alike.

In her latest article, our partner Katia Kakoulli, published in the e-newspaper of the Great Britain-Cyprus Business Association, examines how recent Greek case law offers valuable guidance for Cyprus; articularly in light of the strengthened constitutional framework for environmental protection.

The evolving jurisprudence signals a clear shift toward substantive, evidence-based decision-making, where accessibility, inclusion, and heritage preservation are treated as interconnected, rather than competing, interests. As environmental litigation continues to mature, success will depend less on formalities and more on robust reasoning, proportionality, and scientific grounding.
Read the full analysis here (click here to access the analysis).

We are proud to share that our firm has once again secured a prominent position in the Chambers and Partners Europe Guide 2026, being recognised among the leading firms in the jurisdiction. We are particularly delighted to highlight that our senior consultant and former managing partner, Chris Georghiades, has received the highest individual distinction of Senior Statespeople (General Business Law category), reflecting his longstanding contribution, expertise, and reputation in the legal market. In addition, our partners Demetris Araouzos and Katia Kakoulli have also achieved high rankings, under the Dispute Resolution category.

This achievement reflects our firm’s strong presence in the Cypriot legal market and our ability to provide commercially focused, high-quality advice across a wide range of corporate and business law matters.

We extend our sincere thanks to our clients and our team for their continued trust and collaboration.

After many years of negotiations, the European Union and India have recently reached a preliminary free trade agreement aimed at facilitating trade flows, reducing tariffs, and simplifying customs procedures. The agreement covers markets that together represent around two billion consumers and encompasses goods, services, sustainability, and digital trade, with gradual implementation over an extended period.

For European businesses, the agreement provides for the immediate or phased reduction and elimination of tariffs on a large share of exports to India, particularly industrial products such as machinery, chemicals, and pharmaceuticals. Special arrangements are introduced for the automotive sector, with a significant reduction of the currently high tariffs during a transitional period and the application of quotas. At the same time, access for European companies to selected services sectors is enhanced, while simplified customs rules and stronger protection of intellectual property rights are provided.

From India’s perspective, the EU commits to abolishing tariffs on the vast majority of Indian products from the entry into force of the agreement, with further market opening at a later stage. The tariff reductions cover, among other things, products such as seafood, textiles, clothing, chemicals, base metals, and jewelry, while certain sensitive sectors, such as agriculture and automobiles, are excluded from full liberalization. For steel, specific duty-free quotas are foreseen, without special exemptions regarding the EU’s carbon pricing mechanisms.

The agreement also includes provisions for opening services markets on both sides, as well as rules on digital trade, aimed at facilitating transactions and ensuring data protection and security. Commitments on labor standards, the environment, and sustainability are also included. The next steps involve the publication of the legal texts, technical and legal scrutiny, translations, and approval procedures by the EU institutions, the European Parliament, and India, with an expected timeline of around one year.

The European Union Intellectual Property Office (EUIPO) launched the SME Fund 2026, a grant scheme for small and medium-sized enterprises, on 2 February 2026 with a total budget of €60 million.

The initiative is designed to reduce the cost of obtaining intellectual property (IP) protection for SMEs established in the European Union. It continues a programme first introduced in 2021 and reflects the EU’s broader objective of facilitating access to formal IP rights for smaller businesses.

The fund operates through a voucher-based reimbursement system covering a range of IP-related activities. Eligible SMEs may obtain partial reimbursement for trademark and design applications at EU, national and regional level, as well as for patent-related costs and plant variety protection. The scheme also includes support for IP Scan services, which provide a structured assessment of a company’s intangible assets and IP strategy.

Reimbursement rates vary by category but can reach up to 75% for most registration fees and up to 90% for IP Scan services, subject to defined financial caps. Eligibility is limited to SMEs as defined under EU law, based on staff headcount, turnover and balance sheet thresholds, and applicants must be established in the European Union and engaged in economic activity. Self-employed individuals and certain foundations may also qualify, provided they meet the applicable criteria.

The fund does not apply retroactively, and costs incurred before a voucher is granted are not eligible. Vouchers must be activated and used within specified time limits, failing which they expire. Previous editions of the SME Fund have been characterised by strong demand, with funding allocated on a first-come, first-served basis. A significant proportion of beneficiaries in earlier years accessed formal IP protection for the first time, particularly for trademarks and designs. Against this background, SMEs considering participation in the 2026 edition are expected to benefit from early preparation and timely submission of applications, especially for patent and plant variety vouchers, which have historically been exhausted rapidly.

We are pleased to contribute to the 3rd edition of The Legal Industry Reviews, Saudi Arabia edition, with an article examining Cyprus as a strategic EU gateway for Saudi entrepreneurs and investors, authored by Pavlina Constantinides, Partner and Head of the Corporate Department of our firm.

The article explores Cyprus’s geographic and regulatory advantages, recent reforms, the IP Box regime, EU policy engagement, and developments relevant to market access, technology, IP structuring and cross-border investment. Particular attention is given to Cyprus’s role within evolving Europe–Gulf trade dynamics, including EU institutional developments, Schengen accession prospects and regional connectivity initiatives.

The edition is now available online here: https://thelegalindustry.com/saudi-arabia/

We thank LIR for the opportunity to be part of this edition and to contribute to the broader legal and commercial dialogue between Saudi Arabia and the European Union.