Under the current legal framework in Cyprus, shares can be held through nominees, which can be either individuals or entities, in trust for the beneficial owner of the shares without public disclosure of the ultimate owner's identity. Therefore, the name listed on the certificate of shareholders of an entity can merely state the nominee and not give a complete picture of the shareholding structure of the entity.
In combating money laundering, the financing of terrorist activity and tax evasion the 4th AML Directive has obliged all EU member states to introduce the public register by 20th January 2020. In the meantime, Cyprus authorities have been trying to increase transparency by introducing and proposing reforms of the Cyprus legal framework in implementing the 5th AML Directive, which builds on the steps introduced by the 4th AML Directive.
The purpose of the public registry is to prevent tax evasion, fraud and money laundering by hiding behind "nominee ownership". However, the issue arises as to whether the need to increase transparency will in practice result in violation of the right to privacy. Technology is developing rapidly and often supersedes our ability to estimate its impact and results. Hence, the only way to avoid abuse of the provisions of the Directive is to limit the persons that will have access to the said register. According to the 4th AML Directive, information relating to beneficial ownership will only be made available to persons who "demonstrate a legitimate interest with respect to money laundering, terrorist financing and the associated predicate offences, such as corruption, tax crimes and fraud." However, the 5th AML Directive has amended this be removing any requirement for establishing legitimate interest in granting access to the public register, as reflected in Article 30 of the 5th Directive.
Indisputably, to some extent privacy is overlooked in the process of increasing transparency. What has to be examined is whether the benefits of transparency are proportionate to the loss of privacy. If increasing transparency can ensure fair sharing of information so that the interests of the individual and the government progress steadily together, then limiting or relaxing the rules on privacy in relation to this matter may be considered as an even measure. On the other hand, the right to privacy can be considered either as a right of every individual to protect their individuality or as a sword for the same in abusing the right by hiding behind "nominee ownership" in the name of privacy. Whether the said reform will in fact achieve its purpose or whether it will result in an unnecessary violation of the right to privacy, will be made evident in practice.