Implementation of the Beneficial Ownership Register

As part of the transposition into the Cyprus legislation of the European Council’s Directive (EU) 2018/843 (the 5^th Anti-money Laundering Directive), the establishment of a central beneficial owner register (“BO Register”) has been implemented. All companies and any other legal entities incorporated in Cyprus are obliged to identify and record electronically on the BO Register all relevant information of the beneficial owners who own or control them.

The responsibility for the true and accurate submission of the beneficial owners’ information lies with the company and its officers, and failure to comply may result in severe penalties (up to €20.000 per company).

What is it about?

Within the context of the Prevention and Suppression of Money Laundering Activities and Terrorist Financing Law, the Registrar of Companies issued Directive 112/2021 which was published in the Official Gazette on 12^th March 2021. The Directive provides for the establishment, maintenance and operation of a centralised BO Register.

As per the Directive, Cypriot companies and their officers need to take all reasonable measures to obtain and hold adequate, accurate and current information regarding their beneficial owners. As of 16^th March 2021, an interim system solution has been implemented, enabling the electronic recording of such information in the BO Register. The interim solution is expected to be concluded within 12 months (12^th March 2022), upon which time a final solution should be established.

To be able to electronically file the required information in the BO Register, entities must first obtain access through the ARIADNI government gateway.

Timing of filings

Entities incorporated or registered prior to 12^th March 2021 have until 12^th March 2022 to electronically file thebeneficial owners’ information in the BO Register.

On the other hand, entities incorporated or registered after 12^th March 2021 have 30 days from incorporation/ registration to electronically file the beneficial owners’ information (however, no penalties will be imposed for late submission during the interim solution period).

In case of changes in the information of a beneficial owner, such changes need to be recorded onto the BO Register within 14 days from the change.

Upon conclusion of the interim solution and establishment of the final solution (expected 12^th March 2022), companies will also be obliged to electronically confirm their beneficial owners to the Registrar on an annual basis.

Penalties for non-compliance

The responsibility for the true and accurate submission of the beneficial owners’ information lies with the company itself, as well as its officers. In case of failure to comply, the company and its officers are liable to a fixed penalty fee of €200, plus a further €100 for each day of non-compliance (capped to €20.000 per company).

It is noted that during the implementation of the interim solution for the collection of beneficial owner details, no penalties will be imposed.

Definition of beneficial owner

In the case of corporate entities, beneficial owners are considered to be any natural persons who ultimately own or control the entity, by holding (directly or indirectly) at least 25% plus one share, or who have an ownership interest of more than 25%, or who exercise control via other means (e.g. exercise dominant influence, power to appoint senior management, etc).

If, after having exhausted all possible means, no such persons can be identified, then the entity’s senior management officials will be considered to be the beneficial owners.

In the case of Trusts, the beneficial owners are considered to be the settlor, the trustee, the protector (if any) and the beneficiaries. In case of Foundations or other similar legal arrangements, the beneficial owners are considered to be the natural persons holding equivalent or similar positions.

Information to be filed

The following information needs to be filed in the BO Register for each beneficial owner:

• Name, surname, date of birth, nationality and residential address
• 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
• Identification document number indicating the type of document and the country of document issuance (identity card or passport)
• Date on which the natural person was entered in the register as beneficial owner
• Date on which there were changes in the particulars of the natural person or the date on which the natural person ceased to be a beneficial owner.

If no natural persons are identified as the beneficial owners based on the ownership rights, the details of the senior management officials must be submitted (in such case, it is not necessary to report the nature and extent of the beneficial interest).

The responsibility for submission of the above information lies with the company and its senior management officials.

Who will have access to the BO Register

During the interim solution stage, access to the BO Register is granted only to Competent Supervisory Authorities, the Financial Intelligence Unit (FIU), the Customs Department, the Tax Department and the Police, without any restriction, and upon submitting a written request to the Registrar of Companies.

Upon establishment of the final solution, the following persons shall have access to the beneficial owners’ information through the electronic BO Register:

• Competent Supervisory Authorities, the FIU, the Customs Department, the Tax Department and the Police (unlimited access, with no need to submit a written request to the Registrar)
• Obliged entities, in the context of conducting due diligence and identification measures for the client as defined in the Law (limited access)
• All members of the general public (limited access)

Obliged entities and the general public will need to register with ARIADNI to gain access to the BO Register. Also, their access will be restricted to the name, month and year of birth, nationality and country of residence of the beneficial owner, and nature/ extent of the beneficial interest held, following payment of a fee of €3,50 per company.