The introduction of the UBO Register in 2021
In line with an ongoing global effort aimed at preventing money laundering and terrorist financing, the Government of Cyprus has recently taken further steps to increase transparency in all transactions taking place within the country.
By the decision of the Council of Ministers (16/12/2020) to transpose the 5th EU Anti-Money Laundering Directive (AMLD) at a national level they have authorised the implemention of the central registry of ultimate beneficial owners (“UBO”). This registry is set to contain detailed information on the natural persons who ultimately own or control a legal entity.
Under this transposition of the Directive at a national level, the Council of Ministers decided and passed into the law (the Law) the following:
- The Registrar of Companies and Official Receiver (the “ROC”) is appointed as the competent authority for maintaining a central Registry of Beneficial Owners (“UBO Register”) of companies and of other legal entities; and
- The ROC is authorized to proceed with the collection of information in relation to Beneficial Owners of companies and of other legal entities through an interim information system that is being developed.
The ROC announced that the date that the information collection shall commence would be the 18 of January 2021 (later postponed to 22 February 2021). As from this date, a period of 6 months (i.e. up until the 23 August 2021) shall be given to companies to submit the requested information in relation to the UBOs of relevant legal entities.
Expected requirements of the UBO Register
The provisions of the Law do not explicitly refer to the information that should be entered into the register. Nevertheless, as per 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.
It is still unclear whether this definition will be applied in relation to the UBO Register, however, it can offer some insight as to what definitions are likely to be used to identify UBOs.
It is expected that 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 only have access to such information having a legitimate interest and upon submission of a formal request at the Registrar.
It is important to emphasise, that all information regarding Beneficial Ownership is protected by strict data protection regulations and will only be accessed if it is deemed appropriate, judging by the merits of each case.
We are still awaiting the announcement from the ROC which will provide the specific guidance and instructions concerning the content, format and procedure for submitting the necessary information.
At this stage, however, all companies are urged to ensure that the mandatory information relating to the ultimate beneficial ownership (which ordinarily must have already been in their possession in accordance with the provisions of section 61(A) of the Anti-Money Laundering Law as amended from time to time), has been collected.
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