Cyprus to lift veil of secrecy with register of company owners

FILE PHOTO: A gen­er­al view shows the city of Nicosia, Cyprus January 28, 2021. REUTERS/Yiannis Kourtoglou

Cyprus plans to launch a reg­is­ter in com­ing months iden­ti­fy­ing the own­ers of thou­sands of com­pa­nies on the island, lift­ing a veil of secre­cy on opaque and com­plex cor­po­rate struc­tures that cam­paign­ers say can help crim­i­nals seek­ing to hide their loot.FILE PHOTO: A gen­er­al view shows the city of Nicosia, Cyprus January 28, 2021. REUTERS/Yiannis Kourtoglou

Details of thou­sands of com­pa­nies domi­ciled on the island, many thought to have Russian links, will be col­lect­ed from March 16 to be entered in a so-called Ultimate Beneficial Owner (UBO) register.

Supporters say the reg­is­ter, a require­ment of European Union anti-mon­ey laun­der­ing (AML) reg­u­la­tions, could be a game chang­er for Cyprus, which activists say has in the past been a mag­net for those con­ceal­ing wealth behind brass plate com­pa­nies, lured by com­pet­i­tive tax rates.

We will give com­pa­nies six months to col­lect all the details to enter into the sys­tem,” said Antonia Faita-Stavride, a senior admin­is­tra­tive offi­cer at Cyprus’s Ministry of Energy, Commerce and Industry, who is coor­di­nat­ing the project.

Experts pre­dict some com­pa­nies will shift juris­dic­tion rather than reveal their ben­e­fi­cial owners.

TARNISHED IMAGE

Cyprus has long attempt­ed to shake off an image of a juris­dic­tion that blind­ly takes investors’ cash, no ques­tions asked. A lucra­tive pass­port-for-invest­ment scheme was abrupt­ly pulled last year after reports of pos­si­ble corruption.

Campaigners say find­ing the ulti­mate own­er of Cyprus-reg­is­tered firms at present can be like search­ing for a nee­dle in a haystack — a paper trail that begins with a labyrinth of local “direc­tors” and then loops around oth­er low-tax juris­dic­tions before hit­ting a dead end.

Such shell com­pa­nies are “one of the most used vehi­cles to laun­der mon­ey”, said Maira Martini, research and pol­i­cy expert on cor­rupt mon­ey flows at Transparency International.

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,” said Antoniou.

It was, she said, “a very impor­tant tool” in the hands of authorities.

MORE NEEDED?

Faita-Stavride, the ener­gy, com­merce and indus­try min­istry offi­cial, said the ini­tial reg­is­ter would be an inter­im data­base, which gov­ern­ment agen­cies could access on request.

She said it was hoped the final sys­tem, with dif­fer­ing lev­els of access, would be avail­able “by the end of this year”, but couldn’t be more specific.

Some anti-cor­rup­tion cam­paign­ers say more needs to be done.

Transparency International’s Martini said Cyprus was “super late” in incor­po­rat­ing AML reg­u­la­tions into domes­tic law.

It’s still not going to be a pub­lic reg­is­ter, which is the cur­rent require­ment at the EU lev­el,” Martini said.

And activists say for it to be tru­ly effec­tive, the UBO reg­is­ter should be linked to oth­er data­bas­es, such as real estate ownership.

It is more than just set­ting up a reg­is­ter,” said Martini. “Authorities should be able to search through the reg­is­ter as they see fit, not have to request the infor­ma­tion, and then they should be able to inte­grate this infor­ma­tion with oth­er databanks.”

Reporting By Michele Kambas; Editing by Alex Richardson

Michele Kambas, Reuters