The Republic of Cyprus, following its commitment to initialise rules to prevent and identify money laundering, has introduced an amendment to the requirement of registration of trusts. In particular, until today trusts had no obligation to be registered in any record in the territory of Cyprus.
On September 9 2013, the Official Gazette of Cyprus published the new legislation, according to which amendments on trusts were approved.
Persons providing services of management and administration to trusts are obliged to verify the details and the true identity of the beneficial owners of trusts, including the following categories:
- Beneficiaries or class of beneficiaries;
- Protectors, if any;
- Investment consultants, accountants, tax consultants, if any;
- Activities of the trust; and
- Any other person that exercises the effective control on the trust.
Those information needs to be kept in the Republic of Cyprus and the persons providing such services must be ready at all times to provide them to the competent authority, when requested.
Certain information on trusts, for as long as they are governed by Cyprus Law, will be kept in the so called "Trust Registries". The Trust Registries will be kept by three Cyprus regulatory authorities: the Cyprus Securities and Exchange Commission, which regulates amongst others the service providers, the Cyprus Bar Association, that regulates law practitioners and the Cyprus Association of Certified Accountants. The competent authorities that keep the Trust Registries can exchange information as part of their obligations under the legislation and the Anti-Money Laundering legislation. The new amendments on the legislation clarify that such information will not be made available for the public.
Trust information delivered to the competent authorities shall include:
- Name of trust;
- Names and addresses of every trustee, according to all relevant time;
- Date of creation of the trust;
- Date of any changes of the law governing the trust; and
- Date of termination of the trust.
The information must be provided to the competent authorities within 15 days of creation of the trust or from the date when the trust is governed by Cyprus Law. Any changes to the name of the trust or the details of the trustee as point two must be notified within 15 days from that change. In case of termination of the trust, or change of governing law, the competent authority must be notified within 15 days and the competent authority shall be obliged to keep information of the trust for the next five years.
In regards to trusts that are already in force and under Cyprus Law, trustees that are Cyprus residents have to notify the competent authority of the above mentioned information within six months.
The changes have been welcomed in Cyprus. They are considered as a positive step towards tackling anti-money laundering and a proof that Cyprus is committed to its obligations under the agreement with Troika. The amendments do not remove the level of confidentiality for the standards of Cyprus and at the same time it will be a great tool in evaluating the attractiveness of trusts in Cyprus. Mild concerns have been expressed, though, on the administration cost that will arise from such obligations by the service providers for Trust in Cyprus. Eurofast believes that the changes will be a step forward for Cyprus as a jurisdiction. The information provided to the competent authorities will not reveal confidential information and, also, achieve the monitoring of trusts in Cyprus.
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.