Update: Beneficial Owner Registry - Guidance on the Mandatory Registration by all Cyprus Companies

Introduction 

The Council of Ministers (16/12/2020) decided to transpose the 5th Anti-Money Laundering Directive (AMLD) at a national level and have implemented a central registry of Ultimate Beneficial Owners (“BO Registry”) that consists of the detailed information of the natural persons who ultimately own or control a legal entity.  

Obligation 

Every company or any other legal entity incorporated in Cyprus shall be required to maintain adequate information on its beneficial owner(s) within the BO Registry. 

In the event where the Entity decided to update or change Beneficial Owner(s)’s information or if the Entity decided to elect a new UBO, the Entity and its officers must register the information to the BO registry within 14 (fourteen) days from the date they made the changes. This will take place after the end of the interim solution period.  

 At an annual basis, all entities must confirm electronically their beneficial owner’s information during the period starting from 01st  to 31st  of December of each calendar year. 

The entity and its officials have the general responsibility for the submission of the relevant information.  

Deadline 

A grace period of 12 months starting from 12/03/2021 has been given in order to submit the necessary information to the BO registry, according to the amending directive ΚΔΠ 317/2021 (“Interim Solution Period”).  

At the end of the Interim Solution Period, every entity that will be incorporated after 12/03/2021 will have 30 (thirty) days to submit the relevant information to the BO registry.  

Meaning of the beneficial owner  

According to the “Law”, Beneficial Owner (hereinafter referred to as the “UBO”) means:  

Any natural person(s) who ultimately owns or controls the customer and/or the natural person(s) on whose behalf a transaction or activity is being conducted and includes at least:  

(a) in the case of corporate entities:  

(i) the natural person(s) who ultimately owns or controls a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that entity, including through bearer shareholdings, or through control via other means, other than a company listed on a regulated market that is subject to disclosure requirements consistent with EU law or subject to equivalent international standards which ensure adequate transparency of ownership information. A shareholding of 25 % plus one share or an ownership interest of more than 25 % in the customer held by a natural person shall be an indication of direct ownership.  

A shareholding of 25 % plus one share or an ownership interest of more than 25 % in the customer held by a corporate entity, which is under the control of a natural person(s), or by multiple corporate entities, which are under the control of the same natural person(s), shall be an indication of indirect ownership. This applies without prejudice to the right of Member States to decide that a lower percentage may be an indication of ownership or control. Control through other means may be determined, inter alia, in accordance with the criteria in keep a central register of the beneficial or true owners of firms within their respective requires Member States to jurisdictions. Likewise, for trusts and other legal arrangements.  

(ii) if, after having exhausted all possible means and provided there are no grounds for suspicion, no person under point (i) is identified, or if there is any doubt that the person(s) identified are the beneficial owner(s), the natural person(s) who hold the position of senior managing official(s), the obliged entities shall keep records of the actions taken in order to identify the beneficial ownership under point (i) and this point;  

(b) in the case of trusts: (i) the settlor; 

(ii) the trustee(s); 

(iii) the protector, if any;  

(iv) the beneficiaries, or where the individuals benefiting from the legal arrangement or entity have yet to be determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates;  

(v) any other natural person exercising ultimate control over the trust by means of direct or indirect ownership or by other means;  

(c) in the case of legal entities such as foundations, and legal arrangements similar to trusts, the natural person(s) holding equivalent or similar positions to those referred to in point (b).  

It is further understood that the control by other means can be verified, inter alia, on the basis of the criteria provided in paragraph (b) of paragraph (1) of Article 142 and Article 148 of the Companies Law; 

Accessibility to the BO registry 

The BO registry will become available to the public. The persons that will have access to the beneficial owner’s information through the online portal of BO Registry are the following:   

1. Competent Supervisory Authorities that will have fast, unlimited and unrestricted access ;  

2. Obliged entities that will have restricted access in the context of conducting due diligence and identification measures for the client as defined in the Law after the payment of €3.50; 

3. All members of general public have access to the name, month and year of birth, nationality and country of residence of the beneficial owner, as well as the nature and extent of the beneficial interest held after a payment of €3.50. 

Following the above, during the interim solution period the search facility will not be available to obliged entities and any member of the general public.  

Additionally, during the Interim Solution period, the only persons that will have unrestricted access to the beneficial owner’s information are the Competent Supervisory Authorities including inter alia the Unit, the Tax Department, the Police and the Customs Department.  

 Process of submission  

 The process for submitting the required information to the Registrar of Companies is the following: 

1. Creation of Entity’s profile with Ariadne online portal system. 

2. Upon completion of the registration, the Entity will receive an email which contains the Profile ID code, that will be used for the authentication of the Entity’s profile and an activation link in order to proceed with the activation of the Entity’s profile online.  

3. Further to the above, a physical meeting with one of the following Authorities including inter alia the Citizen Service Center, District offices of the Ministry of Justice, Registrar of Companies and Cyprus post is necessary to validate the information of the Company and the UBO where the following documents must be presented at the physical meeting with one of the abovementioned authorities: (i) Company Registration Certificate; (ii) An official document from the company that created the profile, authorizing the individual presenting the documents, to submit the documents on behalf of the Company; (iii) The name and Civil ID of the authorized individual presenting the document shall be stated in the authorization. The document shall be signed by a company director; (iiii) Authorized individual person’s Civil ID; and (vi) the Profile ID code the 16-digit number.  

Therefore, upon authentication of the Entity’s information and documents the Entity can proceed and submit the below information to the Registrar of Companies using the login details obtained upon the creation of Entity’s profile.  

1. Name, surname, date of birth, nationality and residential address;

2. Nature and extent of the beneficial interest held directly or indirectly by each; beneficial owner, including through percentage of shares, voting rights, or the nature and extent of the Significant influence or control with other means exercised by each controlling person;

3. Identification document number indicating the type of document and the country of document issuance (Identity card or passport); 

4. Date on which the natural person was entered in theregistryas beneficial owner; and

5. Date on there were changes in the particulars of the natural person or the date on which the natural person ceased to be a beneficial owner. 

Consequences of non-compliance  

It is highlighted that fines and penalties may be imposed to Entities and their officers that do not comply with the Registrar’s Directives and the provisions of the AML Law regarding the recording of all requested UBO data to the BO registry. Therefore, failure to comply with the above obligations the Entity and its officials are subject to a financial burden of €200 and further financial burden of €100 for continuing the infringement with a maximum total charge of €20.000.  These penalties will be imposed after the end of the interim solution period, as during the interim solution period no penalties will be imposed.   

For further information or to discuss your circumstances in a private consultation please contact Maria Konstantinidou at [email protected] .

This article is for information purposes and does not constitute advice.