Thousands of companies in Cyprus face heavy fines

On Tuesday, March 12, during the Parliament session, it became known that out of 230 thousand companies registered in Cyprus only 140 thousand provided data on their ultimate beneficial owners (UBO).

The rest are threatened with huge fines if they do not do it by the deadline - until March 31.

Interestingly, while discussing the question, some MPs said that many organizations are unable to contact their UBOs for various reasons. For example, in some cases, UBOs are either in Ukraine or Russia, which makes it difficult to access them. Nevertheless, this does not absolve companies of responsibility. Failure to comply with the rules can turn into big problems and expenses for most.

Recall that from April 1, those legal entities that do not have time to submit to the register will be sent fines or initiate criminal proceedings. By the way, the responsibility for failure to submit information - a fine of 200 euros and an additional 100 euros for each day of delay (the maximum fine can reach 20 thousand euros). If the company, after receiving the notification, fails to provide information or violates the established deadlines for entering information, or knowingly enters false information into the register, the company and its officials may be held criminally liable (imprisonment up to 1 year with a fine of up to 100 thousand euros or without a fine).

Meanwhile, another difficulty has arisen: of the 90,000 organizations that have not updated their UBO records, 70,000 have applied for removal from the registry. However, neither the tax authorities nor the banks have agreed to this. EDEK MP Elias Miriantous said that the huge amount of accumulated documentation is clogging up the Registrar. Miriantous also complained that although Parliament passed a law allowing the use of electronic signatures, the Registrar of Companies has yet to implement it, which means a large amount of paperwork and slow processes.

For his part, Green Party MP Stavros Papadouris emphasized that due to the armed conflict between Ukraine and Russia, many UBO citizens of these countries cannot be tracked down. In particular, he gave the example of a person listed as a director and shareholder for some 800 companies registered in Cyprus, who faces a fine of up to €16 million (800 companies multiplied by a fine of €20,000 in each case).

Papadouris said that as the time for filing the data expires at the end of March, the huge fines could be a trigger for the closure of many family businesses. He urged the Finance Ministry to come up with options to avoid this.

What kind of beneficiary information is entered into the Registry?

Individuals:

1. Full name, date of birth, citizenship, current place of residence;
2. passport details, country of issue;
3. the size of the share of ownership (direct or indirect);
4. date of entry of data about the natural person in the Register as UBO;
5. the date on which the individual's details were amended or the date on which the individual ceased to be the company's UBO.

Trusts, foundations:

1. name, registration number (does not apply to trusts outside Cyprus), country of jurisdiction;
2. legal address (not applicable to trusts);
3. nature and amount of the beneficial interest;
4. the date of entry of the legal entity in the Register as a UBO;
5. the date of amendment of the legal entity or the date on which the legal entity ceased to be a UBO of the company.