Author Archives: CFA Office

CYFA Informative Circular #5/2020 – CySEC Circular C371 Extension of Deadline

Dear CYFA Members,

Please be informed that the Cyprus Securities and Exchange Commission (‘the CySEC’) has issued today Circular C371 informing all interested parties that due to the developments related to the Coronavirus disease 2019 (COVID-19) the deadlines for the submission to CySEC of the 1) Internal Auditor’s Annual Report, 2) AMLCO’s Annual Report and the 3) Form of the Monthly Prevention Statement provided in the AML/CFT Directive are extended.

To that extent and according to the Circular:
1. The Internal Auditor’s Annual Report and the relevant Board of Directors minutes (paragraph 6 of AML/CFT Directive) should be submitted to CySEC by the end of July 2020 at the latest.
2. The AMLCO’s Annual Report and the relevant Board of Directors minutes (paragraph 10(3) of AML/CFT Directive) should be submitted to CySEC by the end of June 2020 at the latest.
3. The Form of the Monthly Prevention Statement (paragraph 11 of AML/CFT Directive) of March, April and May 2020 should be submitted within 15 days from the end of May 2020

The relevant CySEC Circular C371 is attached for your reference. The CySEC link for your reference is: www.cysec.gov.cy/en-GB/public-info/circulars/supervised/aml-cft/86377/

CySEC C371 Circular

CYFA Informative Circular #4/2020 – CySEC Circular C368 – Form QST-ASP Revised Form and Change of Deadline

Dear CYFA Members,

Please be informed that according to Circular C368, the Cyprus Securities and Exchange Commission following the developments related to the Coronavirus disease 2019 (COVID-19), wishes to inform ASPs, that the deadline of the submission of the Form QST-ASP, is extended by two months later. In this respect and according to the Circular released the Form must be successfully submitted electronically via the CySEC’s Transaction Reporting System (‘TRS’) by 15:00 hrs, Tuesday, June 30, 2020, at the latest.

The relevant CySEC Circular C368 can be found below. The CySEC link for your reference is:
www.cysec.gov.cy/en-GB/public-info/circulars/supervised/service-providers/

CySEC Announcement

CYFA submits a position paper on Brexit impact on ASP’s in Cyprus

The Association in collaboration with CCCI prepared a position paper outlining the new challenges that Cyprus and the ASP sector will face following Brexit. At the same time, specific recommendations were made for the purpose of long utilised as future discussion points by Cyprus government during negotiations on Brexit at a bilateral Cyprus-UK level.

Prioritise your time …it is your most precious resource

The Thomson Reuters annual report on the cost of compliance, published late in 2018 for the 9th year, has again highlighted a major challenge faced by Compliance Officers as coping with continuing regulatory changes.[1]

The report states that during 2017, Thomson Reuters Regulatory Intelligence captured 56,321 regulatory alerts from over 900 global regulatory bodies averaging 216 updates a day.

Referring to the number of hours per week compliance teams expect to spend tracking regulatory developments the report states that, this year’s results show a slight uptick, with two thirds of firms (66 percent) expecting the amount of regulatory information published by regulators and exchanges to be slightly or significantly more over the next 12 months.

Two examples of the many legislations that companies need to comply with are The Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007-2018 (enacting the EU’s 4th directive on AML), which came into effect in Cyprus on April 3rd 2018, and the General Data Protection Regulation (GDPR), which came into effect on May 25th, 2018. GDPR caused a lot of consternation and confusion across all businesses in Cyprus, about just what should be done to comply. The 4th AML Directive, though affecting a narrower spectrum of companies, spearheaded a change in approach from simple record keeping for AML purposes, to a more sophisticated risk based approach to AML.

Speaking at the AML & Compliance – Current Developments Seminar, in April 2019, Yiannis Pettemerides, Freelance Compliance Advisor, said, “The AML Directive is not a difficult law, but it is a very time-consuming law requiring compliance teams to gather a lot of information about companies, sources of finances, and background checks on associated persons.”

So how can compliance professionals cope?

They could take the advice offered by American lawyer Jason E. Brown, a Partner with Ropes & Gray LLP, in a paper published by the European Institute of Management and Finance who said “… [compliance officers] “need to understand regulators’ enforcement priorities and strategically deploy their compliance resources to address those priorities.” [2]

Of the varied resources available, our advice is to prioritise your time … it is your most precious resource.

Time is not an easily increased resource. Budgetary constraints may mean adding more personnel is prohibitive while on the other hand finding well-qualified and experienced personnel in the current market presents a recruitment challenge.  Therefore, if increasing resources is not an option, compliance officers need to deploy their time strategically and work to mitigate time-consuming activities.

“Divide your time according to the evaluated risk rating of your clients. Spend 90% of your time on your high risk clients, and the remaining 10% on your normal and low risk clients.” Yiannis Pettemerides, Freelance Compliance Advisor, advised the seminar attendees. But, even when you heed this advice you still need to create and maintain records for all your clients on which to base your evaluations.

Gathering data and ensuring its quality is key to deploying a risk-based approach to compliance. To reduce pressure on your time and optimise data capture, find tools that help you by removing the need for duplicating data entry. Data gathered by company administration and banking activities should be readily available for compliance assessments and reporting.

To benefit from this type of cross-disciplinary collaboration you need an integrated approach to storing and accessing your data. One that also provides you with tools for generating the required reports such as group structures, client statistics and auditors’ reports, delivers alerts about suspect transactions, companies nearing or exceeding their Economic Profile limits, and reduces the time required for compliance monitoring and reporting.

The less time you spend creating records, maintaining Excel and Visio files and calculating beneficial ownership percentages, the more time you have to research clients and sources of financial transactions, activities that should form the core of your compliance activities.

Author: Claire Philpott, Senior Business Consultant, Moebius Limited.

[1] COST OF COMPLIANCE 2018, Stacey English, Susannah Hammond, https://legal.thomsonreuters.com/en/insights/reports/cost-of-compliance-2018

[2] European Institute of Management and Finance, ‘challenges-for-todays-compliance-officers-in-investment-firms-alternative-investment-funds’ <https://eimf.eu/challenges-for-todays-compliance-officers-in-investment-firms-alternative-investment-funds>

CFA Informative Circular #1/2018

Meeting of the Parliamentary Committee of Energy, Commerce, Industry and Tourism held on Tuesday 9th October 2018

A. Subject: Summary of proposed amendments to current legislation (in translation):

  • The Companies (Amended) Law no.2 of 2018
  • The General and Limited Partnership and Trade Names (Amended) Law of 2018
  • The Companies (Amended) Regulations of 2018
  • The Companies (Fees) (Amended) Regulations of 2018
  • The General and Limited Partnership and Trademarks (Amended) Regulations of 2018
  • The inward and outward Redomiciliation (amended) Regulations of 2018
  • The Societa Europea (SE) Regulations of 2018

B. Aim of the proposed amendments:

  • In the context of advancing the Registrar of Companies department, the proposed legislation effectively seeks to restructure submission forms connected to companies, partnerships, trade names, foreign or European companies, as well as the internal procedures followed by the department.
  • The proposed legislation ultimately seeks to simplify all procedures, decrease administrative costs involved, as well contribute towards Cyprus becoming a more attractive destination to the business world, especially when it comes to initiating business activity. Ultimately this aims to enhance the overall competitiveness of the jurisdiction and the utmost compliance to the current legislation.

C. Content of the amendments:

In practical terms, the key amendments to note are the following:

  • Stamp duty 0.6% on the authorized share capital is abolished entirely as a measure to increase competitiveness of the jurisdiction and attract new business;
  • Submission forms are now accompanied with explanatory notes to ensure correct completion is achieved – Contents are simplified.
  • Procedure to remove the word ‘limited’ is simplified: does not require the consent of the Ministry any longer. Included in HE1 form.
  • HE1 shall now be extensive to include registered address, secretary, members, share capital and list of attached documents. Affidavit requirement is removed.
  • HE2: introduction of a penalty for late submission (14 days)
  • HE12: introduction of a penalty for late submission (14 days)
  • HE57: introduction of a penalty for late submission (14 days)
  • HE32: introduction of a penalty for late submission (28 days)
  • HE4: introduction of a penalty for late submission (14 days)
  • Introduction of template regarding mergers, objection to company strike off.
  • Provision for the creation of an electronic newspaper of the ROC department
  • Publications should no longer be made in the Gazette, rather than the electronic newspaper of the Registrar.
  • Introduction of the concept of administrative reinstatement of a company within 24 months of strike off: this is a new concept introduced via the amendments by which any interested party (employee, creditor, tax office etc) may apply to the ROC within 24 months to reinstate the company WITHOUT having to resort to the court.
  • AE5/AE6/AE8: introduction of a penalty for late submission.
  • Trade names/partnerships: if they omit to provide documents requested by the ROC within 6 months, then they are removed from the registry.
  • Simplification of requirements for natural persons registering trade names.
  • Redomiciliations: MEA and ME1 are now consolidated – simplified / abolishment of requirement to submit a separate list of officers and members – it will now be part of the form for completion. ME2 and ME3 shall also be under one document.
  • Abolishment of affidavit requirement for the initiation of business activity (incorporations/redomiciliations/branches/SE formation/public companies).
  • Allotments made in kind: no longer need to provide supporting documentation.

D. Comments:

  • Amendments to be voted by the Parliament in October/November.
  • It was agreed by all members and representatives that the amendments seem beneficial to the current regime, and they opt for a much-needed modernization of the internal procedures followed by the Registrar of Companies department.
  • The new amendments focus on the electronic system of submission and given the success to implement, are expected to create a user friendly and efficient system.
  • Certain forms (such as HE1 for example) can only be implemented subject to installation of new software by the Registrar which is expected to be completed within 3 years from now, which can potentially be a disadvantage as to how soon the new amendments can be adopted.
  • Overall the submission documents are transformed, re-designed and consolidated in an efficient and comprehensive manner, explanatory notes contribute towards minimizing mistakes and circulation of documents through returns, clarifications etc.
  • Most important amendments were noted to be the mechanism of administrative reinstatement without the need of court order, the elimination of 0.6% stamp duty on the authorized share capital and the introduction of penalties for late submission.
  • The new regime seems very promising indeed, however always subject to how effectively and quickly it can be implemented, considering it is conditional on the replacement of the ROC software.
  • It was further noted that if the amendments are voted for, a period of 1 (one) year shall be allowed for full compliance, until all the relevant bodies are fully informed and ready to implement.

On Behalf of

CFA Legal & Tax Committee

23rd October 2018

Disclaimer: The information provided hereby by the Cyprus Fiduciary Association is for informational purposes only and is intended as guidance. The proposed changes/amendments are still subject to approval by the Parliament of the Republic of Cyprus and can be subject to changes or further amendments. Information provided hereby should not be construed as legal/investment/tax/economic advice and should not be relied upon as such. There are no representations or warranties made as to the accuracy of any information provided therein. The Cyprus Fiduciary Association will not accept any liability for any loss or damage arising as a consequence of reliance on such information. The Association does not guarantee that the information included is correct, accurate, complete or non-misleading and specific advice should be sought.