The Fifth Anti-money laundering Directive. (Directive 2018/843) Transposition into Cyprus Law
In accordance with the provisions of the 5th AML Directive, coordination of national and European supervising authorities, is achieved through the interconnection of the Beneficial Owner registers at EU Level, and simultaneously imposes the obligation on Member States to put in place all necessary legislative measures so as to ensure the accuracy of the information of registers.
At the level of the Republic of Cyprus, the 5th AML Directive, was voted into law on the 18/02/2021 by way of an amendment to the the Prevention and Suppression of Money laundering and Terrorist Financing Law 188(I)/2007, thereby fully implementing 5th AML Directive.
Changes to the Prevention and Suppression of Money laundering and Terrorist Financing Law 188(I)/2007, (“the Law”)
Creation of UBO Registry for Companies
The competent authority for maintaining the central register of ultimate beneficial owners ("UBO Register") of Cyprus companies and other legal entities will be the Registrar of Companies and Official Receiver of the Ministry of Energy, Trade, and Industry.
The Registrar of Companies will be authorized to collect all necessary information about the ultimate beneficial owners and other legal entities through the interim system that has been developed.
It is to be noted that at this stage the Law do not explicitly refer to the information that should be entered into the register.
Definition of the UBO
In accordance with the definition of the Law, a UBO is defined as a natural person who has the ultimate control or ultimate ownership in a company.
A further explanation as to the definition of UBO is given as follows:
• Any physical person who ultimately owns or controls a legal entity through direct or indirect shareholding ownership of 25 per cent (25%) plus one share; or
• An ownership interest of more than 25 per cent (25%) in the customer of the company.
Accessibility to the UBO Registry
The information of the UBO Register in its current form will be accessible only by the competent supervisory authorities/regulators, such as, amongst others, the Police, Tax authorities, the Cyprus Bar Association, the Central Bank and the Cyprus Securities and Exchange Commission etc. The relevant supervisory authorities/regulators will have access to such information having a legitimate interest and upon submission of a formal request at the Registrar.
It is to be noted however that the UBO Registry its final form is expected to be accessible to not only the competent supervisory but also to certain types of professionals who have a vested interest in completing thorough due diligence as required by the Anti-Money Laundering regulations, such as and not limited to lawyers, accountants and bankers.
Creation of UBO registry for trusts
The Law stipulates for the creation of a Trusts’ Registry, which will be established by the Securities and Exchange Commission.
Under the Law, access to Companies’ and Trusts’ Registry is given only to the competent regulatory authorities and persons that can demonstrate legitimate interest and proving the existence of such legitimate interest, may have access to the Trust’s Registry.
The 5th AML Directive furnishes members affords the authority to Member States to establish their own criteria of what constitutes legitimate interest and as such access to the information of the beneficiaries of Trusts and other types of legal arrangements shall be government by the law of the Member State where the trustee is established and the legitimate interest to access the Trusts’ Registry shall be subject to national law.
In permitting access to the Trusts’ Registry, Member States are also bound to safeguard the rights to privacy of any individuals concerned in accordance with Data Protection regulations and such all information regarding Beneficial Ownership shall be protected and will only be accessed if it is deemed appropriate, judging by the merits of each case.
Benefit of Changes
The enactment of the provisions of the 5th AML Directive into Law, is of great benefit to Cyprus because it signals a new era in Cyprus. It elevates the status of the island as a creditworthy business centre and it certaintly gives confidence to any investors seeking to make Cyprus their besiness headquarters.