Cyprus Adopts Transparency in Registration of Company Owners
Cyprus has planned to introduce a register in the coming weeks to unveil the identity of thousands of companies in the jurisdiction. Identifying the ownership will help the authorities to find the criminals who hide their illicit income. The complex corporate structure is opaque which has increased the ratio of financial crimes.
The details of the companies will be collected from 16th March and they will then be placed in an Ultimate Beneficial Owner (UBO) register.
Supporters suggest that the register could be a game-changer for Cyprus in complying with the European Union’s anti-money laundering (AML) regulations. The 4th AML Directive obligates the Member States to provide access to the information regarding the beneficial ownership of the companies and other legal organizations. They must disclose the information in a coherent and coordinated way by means of central registers that contain the information of the beneficial ownership. The establishment of a clear rule for public access will allow the third-parties to discover who the beneficial owners of the companies are.
The ministry hopes that the system will be available by the end of this year but they have yet to specify an exact date.
Antonia Faita-Stavride, a senior administrative officer at Cyprus’s Ministry of Energy, Commerce and Industry said, “We will give companies six months to collect all the details to enter into the system.”
However, some experts believe that the companies would rather shift jurisdiction than unveil their beneficial owners. Activists say that identifying Cyprus-registered firm’s owners can be like a needle in a haystack. It is like a trail that starts with a labyrinth and loopholes around low-tax jurisdiction. Shell companies are the most commonly used method of money laundering.
Katerina Antoniou, Director of Compliance, Risk and Anti-Money Laundering at Deloitte, said, “A number of companies registered in Cyprus had already switched domicile after stricter controls imposed by banks in 2020. The registers may trigger another wave of re-domiciliation, especially for those entities that would like to avoid the declaration of the UBOs. It was a very important tool in the hands of authorities.”
A ministry official says that the initial registration is expected to be an interim database and the government organizations would be able to access it on request. The campaigners claim that in order to be more effective, the Ultimate Beneficial Owner (UBO) should be connected to another database like real-estates ownership.