Cyprus fully transposes 4th AML directive by implementing the Beneficial Owners’ Register
Cyprus fully transposes 4th AML directive by implementing the Beneficial Owners’ Register for Companies and Trusts
Pursuant to Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the “4th AML Directive”), Cyprus is obligated to allow access to beneficial ownership information in corporate and other legal entities in a coherent and coordinated way, through central registers in which beneficial ownership information is set out. The 4th AML Directive further requires the establishment of a clear rule of public access, so that third parties are able to ascertain who are the beneficial owners of corporate and other legal entities. Cyprus has finally transposed the 4th AML Directive into full effect as further elaborated on below.
The Council of Ministers on 16th December 2020 on the basis of a recommendation of the "Advisory Authority for combating money laundering and terrorist financing offences", made pursuant to the provisions of Article 57(b) of the "Preventing and Combating money laundering and terrorist financing Laws of 2007 to 2019", (the “AML Law”) resolved to:
Designate the Registrar of Companies and Official Receiver of the Ministry of Energy, Trade and Industry (the “RoC”) as the competent authority for maintaining the Central Register of Beneficial Companies and other legal entities;
2. Authorise the RoC to collect information on the beneficial owner of companies and other legal entities through the interim system solution developed.
For the purposes of the AML Law, a 'beneficial owner' means a natural person who ultimately owns or controls the entity concerned and includes:
in the case of Cyprus private companies, the natural persons who ultimately own or control the company through direct or indirect ownership of a sufficient percentage of shares (typically 25%) or voting rights or ownership interest in that entity, or through control via other means;
in the case of trusts:
the protector, if any
the beneficiaries (or the class of persons in whose main interest the legal arrangement or entity is set up or operates, as applicable)
any other natural person exercising ultimate control over the trust.
Companies and other legal persons had six (6) months as of 18 January 2021 to file the information concerning their beneficial owners with the RoC however this has now been extended due to Covid-19 to 22nd February 2021 and therefore the final date for submission is now 19th July 2021. The beneficial owners register for Cyprus companies will initially be accessible by competent authorities (such as the Tax Department, the Customs & Excise Department and the Police) following submission of a relevant request to the RoC.
During the second half of 2021, it is envisaged that the beneficial owners register will be in full operational form and will become accessible in accordance with the requirements of Directive (EU) 2018/843 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (“5th AML Directive”).
Information to be disclosed
The information to be disclosed according to the AML Law will be indicated in regulations which have not yet been issued. However given the provisions of the 5th AML Directive it is likely that the information will include at least the beneficial owner’s name, month and year of birth, country of residence, nationality, and the nature and extent of the beneficial interest held.
Once in full operation, the beneficial owners register will be accessible by competent authorities, obliged entities in the context of performing their due diligence obligations and any person or organisation that can demonstrate a “legitimate interest.”
The AML Law defines 'legitimate interest' as meaning the interest of a person with respect to the suppression of money laundering activities and the offences prescribed under applicable legislation.
A temporary platform has been developed for the above purposes. However, it is stressed that access to the platform/register is only available to competent authorities, upon request, so the register is not available to the public. This is advised to be the case until the end of 2021, at the earliest.
More information and the relevant link for submitting the above information will be provided by the Cyprus Registrar of Companies in due course.
How MPC Legal can help?
Advice on whether you, your clients, any vehicles in your group structure will be affected by the above changes.
Advise service providers, Investments Firms, Credit institutions and other institutions handling client monies to reformulate strategies for handling the management of cash-intensive clients and risk management strategies
Advice on how to restructure your group to minimise the disclosure/ publicity of such information
Review your corporate structure if needed and guide you through any developments