Cyprus implemented the full transposition of the 4th European Directive (EU 2015/849) of the European Parliament (4th AML Directive) into domestic law and activated the implementation of the Ultimate Beneficial Owner (UBO) Register of Companies and other legal entities in Cyprus. By definition, a natural person who ultimately holds a shareholding or controlling interest or ownership interest of 25% plus one share is deemed as being the UBO.
The obligation to register a UBO will apply to any legal entity, except for trusts that have no tax obligations in the Republic of Cyprus. The management of an entity must ensure the registration of the UBO information. In case of trusts, the administrator and the guardian/proxy holder is a UBO. If a UBO cannot reasonably be designated, one or more natural persons with a senior management position should be designated instead. Each entity must register at least one UBO.
Authority for the maintenance of the Central Register of UBO of Companies
The competent authority for the maintenance of the central Register of UBO of companies and other legal entities shall be the Cypriot Registrar of Companies (RoC). The UBO information for Trusts, Express and Constructive, and other legal arrangements shall be maintained by the Cyprus Securities and Exchange Commission (CySec). From 18 January 2021, the Department of RoC commenced data collection for companies and from this date, all companies were granted a period of 6 months, until 19 July 2021, for registration of the information about their UBOs.
All companies are required to obtain and hold adequate, accurate and current information on their beneficial ownership. This is in addition to basic information such as the company name and address and proof of incorporation and legal ownership. The goal here being to enhance transparency and therefore combat the misuse of legal entities and structures. Further, obligated entities such as banks will have to notify the authorities of discrepancies found while conducting customer due diligence between the UBO registers and the UBO information they hold.
In Cyprus access to the system will be given only to competent authorities and only after they submit an official request to the RoC. The data collected through this interim system will be transposed to the final version of the system that it is expected to be fully developed in the second half of 2021 and access to the fully developed system will be in accordance with the provisions of the 5th AML Directive, concerning the prevention of anti-money laundering and terrorist financing. Cyprus has not yet transposed the 5th Anti-Money Laundering Directive (AMLD5) into national law. However, this is expected to happen during 2021.
As a Member State, the Republic of Cyprus aims to always be in full compliance with applicable European Union (EU) laws, using its best efforts to transpose any new amendment into national law on a timely manner and in a way that would not affect, but would rather enhance, the business activities within or through Cyprus.
Cyprus Companies are urged to commence collecting the mandatory information which must have already been in their possession in accordance with the provisions of section 61(A) of the Anti-Money Laundering Law as amended from time to time. Additionally, such information must also be kept by regulated entities that provide services to companies on the basis of sections 2A(d), 60 and 61 of the above-mentioned law as well as on the basis of the law regulating companies providing administrative services.
How Can We Help?
Valsen Fiduciaries Group, will provide further updates and guidance, as more details become available regarding compliance with the new directive. We are at your disposal to discuss the effect of the above provisions to you or your Cyprus entity. Please contact us through
[email protected] or +248 2 525 217