Revisions to Cyprus’ AML Framework: Enhanced UBO Register Compliance

Cyprus’ Prevention and Suppression of Money Laundering Activities Law (“AML Law”) underwent significant revisions on 6 December 2024, reshaping how beneficial ownership (“UBO”) data is regulated and enforced. These changes aim to resolve existing challenges in implementing UBO Registers, reduce administrative burdens, and strengthen regulatory oversight. Below is an in-depth analysis of the key updates.

I. Streamlined Penalty Structure for Non-Compliance

One of the primary reforms is a recalibration of penalties for non-compliance with UBO reporting obligations. In the past, fines could reach an upper limit of EUR 20,000, a figure often criticised for being excessive and disproportionate to the nature of the default.

Under the revised AML Law:

Initial Penalty: EUR 100 for the first day of non-compliance.
Daily Increment: EUR 50 for each subsequent day of non-compliance.

Maximum Penalties by Register Type:

Corporate Entities and Trusts: Fines are capped at EUR 5,000.
Associations and Foundations: A lower cap of EUR 2,000 applies.

This pragmatic adjustment ensures enforcement remains firm but fair, addressing concerns raised by businesses and organisations while incentivising timely compliance.

II. Unified Liability for Defaults

Previously, entities and their officers faced separate fines for reporting failures, often resulting in overlapping penalties and excessive financial exposure. The amended law simplifies this approach by introducing a unified fine system:

Entity Responsibility: A single fine is imposed on the defaulting entity.
Joint Liability: Company officers share responsibility for the payment of fines but no longer face independent penalties.

Additionally, the law explicitly excludes company secretaries from liability for UBO reporting failures. This provision aligns liability with actual control and decision-making roles within the organisation, fostering a more equitable enforcement environment.

III. Strengthened Enforcement Mechanisms for the Registrar of Companies

The amendments equip the Registrar of Companies with enhanced tools to ensure compliance with UBO reporting requirements:

Judicial Orders: The Registrar can now petition the courts to compel individuals to fulfil their obligations under the AML Law.
Administrative Strike-Off: Persistent non-compliance may result in the removal of a company from the official registry, effectively dissolving the entity.

These measures underscore the government’s commitment to bolstering regulatory enforcement while providing clear consequences for prolonged non-compliance.

Procedural Updates and Appeals Framework

The Registrar of Companies is expected to introduce new directives that reflect these legislative changes. Key developments anticipated include:

Updated Reporting Guidelines: Revised procedures will align with the amended AML Law.
Objection Mechanism: Entities will be granted the opportunity to formally challenge fines or administrative actions through a structured appeals process.

Such updates aim to enhance procedural transparency and accountability, ensuring a balanced approach to enforcement.

Practical Steps for Compliance

The latest amendments emphasise the importance of proactive compliance with UBO reporting requirements. Businesses and organisations should take the following steps:

Conduct a thorough review of existing reporting practices to identify and rectify any gaps.
Stay informed of updates to the Registrar’s directives.
Ensure internal processes are aligned with the revised penalties and liability provisions.

How Chambers & Co Can Assist

Navigating the complexities of the amended AML framework requires expert guidance. Our experienced lawyers at Chambers & Co is here to support you in:

Evaluating your current compliance status.
Preparing accurate and timely UBO reports.
Representing your interests in appeals or enforcement proceedings.