Introduction

In the global context of strengthening transparency and combating money laundering from illegal activities, Cyprus has created the Register of Beneficial Owners (UBO Register). The UBO Register is a critical regulatory mechanism designed to identify individuals who ultimately control and benefit from Cypriot companies and other legal entities in Cyprus. This initiative aligns Cyprus with European Union directives, particularly the Fourth and Fifth Anti-Money Laundering Directives, and strengthens the regulatory framework for combating financial crimes.

What is the Cyprus UBO Register?

The UBO register is an electronic register managed by the Registrar of Companies. The said register records the ultimate beneficial owners (UBO) of all Cypriot companies and certain other legal entities registered in Cyprus. This initiative aims to promote transparency by making the information recorded in the register accessible only to state regulatory authorities and specific entities, fulfilling Cyprus’ obligations under EU anti-money laundering (AML) legislation.

The UBO Register empowers entities to submit and periodically update the details of individuals who hold a significant ownership interest or control within a Cypriot company, helping Cyprus strengthen its defences against financial wrongdoing and enhance its reputation as a safe jurisdiction for international business

Who Must Register?

All companies and partnerships registered under Cyprus Companies Law, Cap. 113, must disclose beneficial ownership details unless exempted. Entities required to register include:

• Companies incorporated or registered in Cyprus.
• European public limited liability companies (SE).
• Partnerships (both general and limited partnerships).

Entities not subject to this requirement include:

• Publicly listed companies subject to EU disclosure standards or equivalent international regulations.
• Entities undergoing liquidation or strike-off initiated on or after 12 March 2021.
• Overseas companies with a branch in Cyprus.

Who is Considered a Beneficial Owner?

According to the AML Law, a “beneficial owner” is any natural person who owns more than 25% of the shares, voting rights or ownership rights of a Cyprus company, directly or indirectly, or exercises equivalent control. This definition applies even if ownership is indirect, such as through other legal entities or trusts.

In cases where:

• No individual qualifies as a beneficial owner under these criteria, the details of the senior management officials must be provided instead.
• The beneficial ownership structure involves trusts, foundations, or similar arrangements, additional disclosures for trustees, settlors, and beneficiaries are required.

Required Information for the UBO Register

The information submitted for each beneficial owner must be comprehensive and up-to-date, including:

• Personal Details: Full name, date of birth, nationality, residential address, and identification document details.
• Ownership Details: Nature and extent of the beneficial interest held, specifying the percentage of shares or voting rights, or other types of control.
• Historical Data: Dates marking when an individual became or ceased to be a beneficial owner, or when previously disclosed information changed.

For complex ownership structures involving trusts or foundations, details of each trustee, settlor, and beneficiary must also be disclosed.

Key Deadlines and Reporting Requirements

Cypriot entities must meet to specific deadlines for disclosing and updating information about their beneficial owner:

• New Registrations: Within 90 days of their formation, Cyprus entities will have to proceed with the registration of information on the pragmatic ownership.
• Changes in Ownership: Where there is a change in the ownership of a Cyprus entity, the Cyprus entity must, within 45 days of the change, proceed to register such changes.
• Annual Confirmation: Each Cyprus Company has an annual obligation to reconfirm the accuracy of the information it has registered. This updating must be carried out between 1 October and 31 December each year.

Penalties for Non-Compliance

Cyprus entities and their officers who fail to comply with the UBO reporting obligations face automatic fines, including:

• Initial Fine: €200 for non-compliance.
• Daily Accrual: €100 for each day of ongoing non-compliance, capped at €20,000.

In serious cases, in particular where officers demonstrate negligence or deliberate non-compliance, there may also be criminal liability. Officers can avoid penalties if they can show that they have exercised due diligence in fulfilling these obligations.

Access to the UBO Register

Access to the UBO register (and to the information that each company registers) is not public but is instead strictly limited. In particular:

• Authorities and Supervisory Entities: Competent authorities, such as the Financial Intelligence Unit (FIU), Customs, Tax Department, and the Police, have unrestricted access.
• Obliged Entities: Banks, accountants, and other professionals who conduct due diligence on clients can access the Register as part of AML procedures.
• Public Access: Following a recent ruling by the Court of Justice of the European Union, public access is currently restricted, safeguarding the privacy of beneficial owners.

Practical Considerations for Compliance

To ensure compliance with UBO obligations, Cypriot entities should:

• Identify Beneficial Owners Early: They should review ownership structures to identify beneficial owners and ensure data accuracy.
• Monitor and Update Regularly: Implement internal processes to monitor changes in beneficial ownership and report updates within the specified timeframe.
• Seek Professional Guidance: Consulting with legal and compliance experts can streamline the reporting process and mitigate the risk of penalties.

Conclusion

The Cyprus UBO Registry marks a crucial step towards enhancing corporate transparency and compliance with global standards for combating money laundering in Cyprus. By understanding these requirements, companies can ensure compliance and contribute to a transparent business environment in Cyprus. For further assistance on complying with UBO Registry obligations, our team at Polycarpos Philippou & Associates LLC is here to guide you through every step of the process.