Following the adoption of EU Directive 2018/843 (the 5th Anti-Money Laundering Directive) (the “AML” or the “Directive”), the Republic of Cyprus has proceeded with the amendment of Law (L. 188(I)/2007) on the Prevention and Suspension of Money Laundering Activities (the “Law”), so as to be fully aligned with the Directive.
Scope
The scope of the Directive and thus the Law is to secure that companies and any legal entities incorporated in the Republic of Cyprus are accountable and hold adequate and up-to-date information concerning their beneficial ownership through the established centralised Registry of Ultimate Beneficial Owners (the “UBO Register”) that will include all necessary details on the beneficial ownership of entities that fall under the Law.
Definition of Beneficial Owner (BO)
According to the AML Directive, ‘‘Beneficial Owner’’ means any natural person(s) who ultimately owns or controls the company directly or indirectly (owner of 25% plus one share either directly or indirectly).
UBO Register for Corporate Entities
This Register, is created and managed by the Registrar of Companies (the ‘‘ROC’’). All companies and legal entities incorporated in Cyprus and subject to its laws, are required to maintain adequate information on their beneficial owners. Detailed information on the natural persons who ultimately control or own a legal entity and their respective rights in the entity must be entered into the UBO Register.
Once finalised, the Register for Corporate Entities will be made accessible to the general public. This is an extension from the 4th AML Directive, which envisioned/allowed only the relevant authorities and obliged entities in the course of performing their due diligence obligations would have access to the Register.
UBO Register for Trusts (or Similar Legal Arrangements)
The Law also provides for the UBO Register for Express Trusts. This Register is created and managed by the Cyprus Securities and Exchange Commission (the ‘‘CySec’’). The required information as to the identity of the following persons are required:
the settlor,
the trustee,
the protector (if any),
the beneficiary (or the class of people whose main interest in the legal arrangement or entity is set up or operates, as applicable), and
any other physical person exercising effective and ultimate control over the trust.
Contrary to the Register for Corporate Entities, the Register for Trusts will not be made publicly accessible. Only competent authorities and obliged entities in the course of performing their due diligence obligations, as well as to any physical or corporate person that can demonstrate a ‘‘legitimate interest’’ will have access to the UBO Register for Trusts.
Competent Authorities in this case include:
Supervisory Authorities (Central Bank, CySec, CyBar, ICPAC etc.),
MOKAS,
Tax Authorities,
Customs Department, and
Cyprus Police
All other organisations and institutions will have to show a ‘‘legitimate interest’’ to be able to access the Register for Trusts (i.e. the interest of a person with respect to the suppression of money laundering activities and the offences prescribed under applicable legislation.)
Exceptions
(1) Where the UBO would be exposed to disproportionate deception, kidnapping, extorsion, harassment, violence, intimidation or where the UBO is a minor or incompetent, exceptions as to the access of such information are applicable.
(2) Where a Trust or a similar legal arrangement holds or owns a controlling interest in a corporate or other legal entity, directly or indirectly, access to such information will be granted upon written request.
Procedure
In order to obtain access and use the e-filling system, entities and their officers must first obtain access through the government getaway portal “ARIADNI”, if not already registered.
Time-frame and other information
The interim solution must be filed and completed until 12th March 2022.
For companies incorporated on or after the 12th March 2021, filing of the above to the UBO Register must be completed within 30 days from incorporation.
A grace period of 6 months was initially given to all eligible service providers to collect and submit the required information.
Note: Personal information provided, will not be widely publicly available. But Competent Supervisory Authorities, the FIU, the Customs Department, the Tax Department and the Police have unrestricted access to the BO information.
Next Steps : Required Actions
Companies and other entities should review the information they have on their UBOs and update the UBO Registers accordingly. Registering the information on the UBO Register is not a once-off activity. On the contrary such information will need to be monitored and modified regularly (when relevant changes take place in the structure of the Company or entity which resultantly affect the UBOs and their rights).
Going onwards, both the obliged entities, as well as the Member States themselves, are required to implement and manage mechanisms so as to ensure that the registers are updated and correct. Persistent and continuous data collection and filling of all current and future changes is essential.
For all new Companies incorporated or legal arrangements made from now on, there will be a 30-day filling period, from the day the incorporation or arrangement is made available.
Our Law Firm undertakes to submit the relevant information of Cyprus companies and ensure compliance with the said Law/Directive. For more information and/or consultation please contact our office.
