Key changes in the framework regulating the register of beneficial owners
On 06/12/2024, the Law on the Prevention and Suppression of Money Laundering Activities (Amendment) (No. 2) Law of 2024, numbered N.141(I)/2024 (the “AML Law”), was published. The changes aim to address both compliance challenges and practical concerns faced by companies and other legal entities.
The main amendments of this law are analyzed below:
- Changes to the Penalties for Non-Compliance
- Each director and secretary will not be individually liable to a fine for non-compliance.
- Fines will only be imposed on the Company or other legal entity that refuses, omits, or neglects to fulfill the obligations of submitting information on beneficial owners, as these obligations arise under the provisions of AML law.
- Directors Jointly and/or Severally Liable with the Company
- A director or managing director of a company that refuses, omits, or neglects to fulfill the obligations of submitting information on beneficial owners is jointly and/or severally liable with the Company for the payment of the fine imposed on the Company.
- Reduced Fines
- A fine of one hundred euro (€100) will be imposed on the first day of the violation; and
- A further fine of fifty euro (€50) for each day such violation continues, with a maximum total fine of five thousand euro (€5,000) per company or other legal entity.
- New Authorities granted to the Cyprus Registrar of Companies
Cyprus Registrar now has the authority to:
- issue Regulatory Administrative Acts (RAA) for the establishment of the procedure for administrative review and/or submission and examination of an objection against a decision imposing a fine.
- delete from the register of business entities a company or other legal entity that refuses, omits, or neglects to fulfill its obligations to update the information on beneficial owners.
- seek Court Orders, ordering any person to comply with the obligations arising from AML Law.
Decisions of the Cyprus Registrar following the new AML Law amendment
- Within the framework of reviewing the practical application of the legislation and taking into account the high fines, the size of companies in the Republic of Cyprus, which are mostly small and medium size companies, the high percentage of compliance achieved, but also the compensatory measures included with the aforementioned amendment of the Law, the executive authority, in consultation with the House of Representatives, decided to grant an additional extension of the prescribed time for submitting beneficial owner information for all Companies and other Legal Entities, until 31 January 2025.
- It has also been decided that an extension of the prescribed time for completing the confirmation process of the information for the year 2024 is granted until 31 March 2025.
- It is emphasized that from 1 February 2025, non-compliance with the submission of beneficial owner information will result in the imposition of administrative and other sanctions, in accordance with the provisions of the AML Law.
- Fines imposed since 01/04/2024 are withdrawn, and payments already made will be refunded as follows:
- For JCC payments made online, the amount will be refunded directly to the card used, without the need for any further action by the affected person.
- For payments made to the Cashier of the Department of Registrar of Companies and Intellectual Property, the amount will be refunded to the applicant’s Bank Account after the submission to the Department’s Cashier of KE1 form and FIMAS Authorization Form, proof of payment and their IBAN to process the refund.
The reduction of fines, the extension of deadlines as well as the introduction of fairer processes, alleviate the burden on small and medium enterprises, promote voluntary compliance and uphold the integrity of Cyprus as a jurisdiction that adheres to laws and regulations, fostering transparency and strengthening anti-money laundering practices.
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