Cyprus has activated the beneficial owners register for Cypriot companies and other legal persons registered in Cyprus. In doing so, Cyprus is fully transposing into national law 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).
The Cypriot Government appointed the Registrar of Companies and Official Receiver (the RoC) as the competent authority to keep the beneficial owners register concerning companies and other legal persons.
While the creation of the beneficial owners register was provided for under section 61Α(4)(a) of the Prevention and Suppression of Money Laundering Activities Law of 2007, as amended (the AML Law), the Cypriot Government only issued subsidiary legislation activating the register and appointing the RoC as the competent authority in December 2020.
The 4th AML Directive required EU Member States to allow access to beneficial ownership information on 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 required 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.
For the purposes of the AML Law, a 'beneficial owner' means a natural person who ultimately owns or controls the entity concerned and includes at least:
- 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 settlor
- the trustees
- 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 have six (6) months as of 18 January 2021 to file the information concerning their beneficial owners with the RoC. 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 the 5th AML Directive (Directive (EU) 2018/843 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing).
Once in full operation, expected in the second half of 2021, 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.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.