CySEC has issued a new Administrative Regulatory Act with regards to the enactment of the Express Trusts or other similar legal arrangements BOs.

Pursuant to Article 61C of the Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2021 (the “AML Law”) issued on the 18th of June 2021, the Cyprus Securities and Exchange Commission (the “CySEC”) adopted the Regulatory Administrative Act 257/2021 (the “Directive”), under which is identifying the obligations and procedure for the registration, notification, administration, maintenance and update of the information in relation to the Register of Beneficial Owners (the “Register of BOs”) of any Cyprus Trust and/or other similar legal arrangements. Such registration will be effected through the electronic system which will be maintained and operated by CySEC.

The Information required to be filed pursuant to the Directive with respect to the information which must be submitted in relation to any Cyprus Trust or other similar legal arrangements in the Register are the following:

1. Name of the Trust;
2. Country of jurisdiction and date of establishment of the Trust;
3. Governing law;
4. Date of expiration (if any);
5. In relation to a similar legal arrangement, the type of such arrangement;
6. Information as to the country of domicile or residence of the Trustee or other person having an equivalent position and the residential address;
7. In the event that the place or residency of the Trustee or other person(s), having an equivalent position, is outside of the EU and concludes a business relationship on behalf of the Trust or the similar legal arrangement in the Republic of Cyprus, the date of commencement of the business relationship, the name of the person with whom a business relationship is concluded as well as the agreement governing the business relationship;
8. In the event that the Trustee or other person(s), having an equivalent position, is placed or resides outside the EU and acquires immovable property in the name of the Trust or the similar legal arrangement in the Republic of Cyprus, the registration number and address of immovable property as well as the title of ownership of the immovable property;
9. Any other information and/or supporting documents that may be required by CySEC.

Definition of Beneficial Owner

As per the definition of BO given by the AML Law, BO can be any physical person who has the ultimate ownership or control of a legal entity and in relation to Cyprus Trusts or other similar legal arrangements and includes the following persons:

1. other settlor;
2. the trustee;
3. the protector (if any);
4. the beneficiary(-ies); or
5. any other physical person who exercises control of the Trust through direct or indirect ownership or other means.

Information to be filed in relation to BOs according to the Directive

Having identified the beneficial owner based on the definition of the AML Law, the Trustee or the person holding a similar position must submit the following details in relation to BOs of Trusts or similar legal arrangement:

1. Name and surname;
2. Father’s name;
3. Date of birth;
4. Place of birth;
5. Nationality(-ies);
6. Residential address;
7. Number, type and country of issuance of the identification document;
8. Deceased date (where applicable);
9. Date on which the physical person has become beneficial owner;
10. The nature and extent of the beneficial interest held directly or indirectly by each beneficial owner;
11. Role of the said person in the Trust or similar legal arrangement;
12. Any other information and/or supporting documents that may be required by CySEC.

Right of Access to the Register

In accordance with the Directive, right of access to the Register is granted to an authorized user. An authorized user is defined as follows:

Any physical person being registered with the BO Register:

1. under his capacity as Trustee of a Trust or other person having an equivalent position to other similar legal arrangement; or

• to the following persons as per Article 61C (12) (a) – (d) of the AML Law: to the responsible Supervisory Authority, as defined by Section 59 of the AML Law, Unit, Customs and Excise Department, Tax Department and Police without any limitations;
• to obliged entities* for due diligence purposes and identification of their clients upon payment of respective fee to legal or physical persons that can demonstrate legitimate interest in accessing the Registry and proving the same through relevant procedure to be implemented, upon payment of respective fee to legal or physical persons in relation to a Trust which holds or owns a controlling interest in a company that is not incorporated in Cyprus upon the written request of the said persons and payment of respective fee;

(Collectively referred to as the “Authorized Users”)

*Obliged entities as defined by Section 2A of the AML Law means (i) credit institutions, (ii) financial institutions and (iii) natural or legal persons acting in the exercise of their professional activities which among other include the auditors, external accountants and tax advisors, notaries and other independent legal professionals as well as company service providers.

CySEC will indicate in the near future the procedure to be followed in relation to the registration of the Authorized Users to their system.

Right of Access by obliged entities

An access to the Register will be granted to an obliged company if the latter will provide CySEC with the following documents:

1. Declaration by the obliged entity that the purpose of accessing the Register relates solely in the context of conducting due diligence and identification measures for the client;
2. Consent by the Trustee or other person having an equivalent position for having such access;
3. Any additional information and/or document that CySEC may require.

The following information of the BO Register will be available to an obliged company:

• Full name; Full date of Birth; Country of residence and Nationality (-ies) Nature and extent of the beneficial interest held directly or indirectly by each of the Trust’s beneficial owner.

Right of Access by natural or legal persons with legitimate interest

For the purpose of access to the Register by a natural or legal person with a legitimate interest the following shall apply:

1. The application by the natural or legal person must be submitted to CySEC through the System duly justified;
2. In the event that CySEC decides that legitimate interest exists, CySEC informs the Trustee or other person having an equivalent position accordingly and shall provide a period of ten (10) days for submitting any written representations;
3. CySEC after taking into consideration any written representations that may be submitted, notifies its final decision to the applicant and the Trustee or other person having an equivalent position.

Right of Access by natural or legal persons with controlling interest

For the purpose of access to the Register by a natural or legal person in relation to a Trust which holds or owns a controlling interest in a company that is not incorporated in Cyprus upon the written request of the said persons the following shall apply:

1. The application by the natural or legal person must be submitted to CySEC through the System duly justified;
2. During the examination of the application for accessing the Register, CySEC may in its own discretion request from the applicant further information and/or details and/or documents and/or the opinion from any other person or authority.

Exception to the right of Access (exceptional circumstances only)

In exceptional circumstances, access to information in relation to the BOs Register is allowed, in part or in whole, where that information would expose the BOs to a disproportionate risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation or where the BO is a minor or is legally incompetent.

For the purpose of requesting an exception to the access to information in relation to the BOs of the Trust or similar legal arrangement, in part or in whole, the following shall apply:

1. The application must be submitted to CySEC through the System duly justified;
2. During the examination of the application for accessing the register, CySEC may in its own discretion request from the applicant further information and/or details and/or documents and/or the opinion from any other person or authority.

Timeframes

The Trustee of a newly established Trust or other person having an equivalent position to a similar legal arrangement who resides in the Republic of Cyprus must submit to CySEC through the System an application for registration with the BO Register within fifteen (15) days from his appointment.

The Trustee of an existing Trust or other person having an equivalent position to a similar legal arrangement who resides in the Republic of Cyprus must submit to CySEC through the System an application for registration with the BO Register within six (6) months from the effective date of the Directive being the date of its publication in the Official Gazette of the Republic of Cyprus i.e., 18th of June 2021.

In the event that a change is made in relation to the BO’s information already filed in the Register, the new information must be submitted within fifteen (15) days from the date that the trustee received notice of such change.

The obligation to notify CySEC with regards to changes of Trustee information lies with the new Trustee.

The subscription in the register grants access for the period of one (1) year.

The information provided by A.G. Paphitis & Co. LLC is for general informational purposes only and should not be construed as professional or formal legal advice. You should not act or refrain from acting based on any information provided above without obtaining legal or other professional advice.

Should you have any questions please contact us.