Further to the recent turbulence which arose as a result of the lapse of the deadline for the submission of details of the beneficial owners of companies with the Cyprus Register of Beneficial Owners (the Cyprus UBO Register), the Cyprus Registrar of Companies has issued guidance pursuant to which it provides a final extension of the deadline for the submission of the details of the beneficial owners to the final solution of the electronic Cyprus UBO Register and it decides the repayment of the fines imposed due to the late filings.
Background
As part of the implementation process of the Prevention and Suppression of Money Laundering and Terrorist Financing Law (188(I)2007), all corporate entities were required to file their updated UBO data by 31 December 2023. In an effort to conform with EU legislation, approximately 200,000 registered corporations had to re-enter their details into a new digital platform. Challenges posed by the transition resulted in thousands of companies failing to comply and facing exhaustive fines.
New extension
On 29 January 2024 the amending Regulation 34/2024 came into force, regulating the extension of the prescribed deadline for the submission of data to the Registrar of Ultimate Beneficial Owners (UBOs). This move aims to provide additional time for companies and other legal entities to comply with the regulatory requirements.
According to the Regulation, the deadline for the submission and confirmation of data for UBOs has been extended for all types of Companies to 31 March 2024. Simultaneously, the obligation to submit additional information for companies or other legal entities whose shareholding structure ends in a trust, foundation, or other legal arrangement similar to a trust is also regulated, again until 31 March 2024.
Cancellation of fines
Recognising that the guidance provided in the past concerning the deadlines for submission were not entirely clear as well as the significant burden on companies that have not appreciated the deadlines, the Registrar of Companies decided to cancel the fines for non-compliance and return any fines paid. The Regulation annuls the penalties previously imposed. This decision reflects an understanding of the operational hurdles faced by businesses, particularly in navigating complex regulatory frameworks.
Current requirements
The Cyprus UBO Register, a fundamental component of anti-money laundering and counter-terrorism financing efforts, mandates that businesses disclose accurate information about their beneficial owners to relevant authorities. In Cyprus, like in many other jurisdictions, failure to comply with UBO reporting requirements could result in hefty fines and penalties. As of 1 April 2024, non-compliance with these extended deadlines will result in the imposition of penalties in accordance with the Anti-Money Laundering and Terrorist Financing Law (188(I)2007) and Law K.D.P.112/21.
Final remarks
Looking ahead, the decision of the Cyprus Registrar of Companies to return fines related to UBO registry submission sets a positive precedent for regulatory flexibility and responsiveness. It underscores a commitment to striking a balance between regulatory oversight and business facilitation, ultimately fostering a conducive environment for sustainable economic development. Nevertheless, it is expected that such lenience shall not be repeated. Cyprus businesses are encouraged to stay abreast of updates and seek guidance from legal and compliance experts to ensure adherence to UBO reporting requirements. Proactive measures, such as conducting regular audits and enhancing internal controls, can facilitate smooth compliance processes and mitigate potential risks.
For more information please contact any member of the AML Compliance, Sanctions and Investigations team.
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