Michalis Sialounas
On 21 November 2024, the Cyprus Parliament approved significant amendments to the Prevention and Suppression of Money Laundering and Terrorist Financing Laws of 2007-2023 (Law). These amendments primarily aim to revise the implementation of the central register of beneficial owners of companies and other legal entities, with the primary goal of reducing financial penalties for non-compliance with beneficial ownership reporting requirements.
Key amendments to the Law:
- Notification Requirements
Previously, entities were notified by the Registrar of Companies and Intellectual Property (Registrar), and the Cyprus Securities and Exchange Commission (CySEC) before penalties were imposed. Under the amended Law, the requirement for advance notification of fines has been removed. Companies and other legal entities will now receive a written reminder specifying the deadline for submitting or confirming beneficial ownership information, at least thirty days prior to the deadline. Notifications will be deemed received three working days after dispatch.
- Authority to Withdraw Penalties
The Registrar will now have the authority to partially or fully revoke penalties for non-compliance, in relation to beneficial owner reporting, up until 31 March 2024 or 30 September 2024.
- Inactive Companies
Penalties levied on inactive or dormant companies that have since been removed from the register may now be withdrawn by the Registrar.
- Reduction in Penalty Amounts
The penalty for failing to submit beneficial ownership information has been reduced from €200 to €100. Additionally, the daily penalty for continued non-compliance is reduced from €100 to €50, with the total penalty cap reduced from €20,000 to €2,000.
- Company and other Legal Entities-Specific Penalty Liability
Financial penalties will now be imposed solely on the company or other entities (such as associations, foundations, federations, and unions). Directors and managing directors, or their equivalents, will be jointly and severally liable for the penalties, while secretaries (or their equivalents) will no longer be held liable.
Impact on Businesses:
These amendments reflect a shift towards a more lenient and streamlined penalty structure, aiming to encourage compliance while alleviating the financial burden on companies and legal entities. The regulators signal a commitment to fostering a more cooperative relationship with businesses, prioritising corrective actions over punitive measures and contributing to a more dynamic and resilient business environment.
Awaiting Official Amendment to the Law
Although the amendments have been approved, they will not take effect until the amended Law is published in the Cyprus Gazette, which is expected by the end of November 2024. Our team is closely monitoring the situation and will provide timely updates.
* This publication is intended as a general guide for informational purposes only. It does not purport to be comprehensive or to render professional advice. Before making any decision or taking any action that may affect you or your business, bespoke advice should be obtained.
