Representatives of the Cyprus Fiduciary Association had a meeting with Mr Marios Neoptolemou, Head of the On-Site Inspection Function of the Supervision Division of the Central Bank of Cyprus (CBC), and his team, on Wednesday, May 3rd, at the offices of the CBC. The meeting was requested by CFA following the ‘Think Tank’ meeting of the Association on April 5th, in order to inform the people in charge at the CBC of the various issues faced by the fiduciary sector.
The representatives of CFA initially gave an overview of the mission and targets of the Association and explained the role and activities that CFA undertakes. After congratulating Mr. Neoptolemou on his new duties, the president of CFA, Christos Michael, emphasized the significant role of the Central Bank of Cyprus as the most experienced and established regulator in Cyprus, and stated that CBC needs to facilitate the coordination and development of the regulation in financial services in Cyprus.
Mr Marios Neoptolemou, after thanking CFA representatives for their visit, stated the need for continuous development in the country’s monitoring activities, since, despite the efforts and the introduction of strict compliance regulations, Cyprus is still under the spotlight. CBC, as the main representative of Cyprus abroad, has to be very careful on how it treats developments in this respect. Mr Neoptolemou gave an update on the following matters:
- The adoption of the 4th EU AML Directive in the existing Cyprus AML Law is almost completed and the 2nd draft is already under consideration. All major amendments regarding Beneficial Ownership, the Risk Assessment procedure, and the implementation of the UBO Registry, will be adopted. Especially for the latest, Mr Neoptolemou said that, although not confirmed, the Trust Registry most probably will be maintained by the three regulatory authorities (CySEC, ICPAC, CBA), and for companies the most favoured scenario is that it will be maintained by the Registrar of Companies. It is expected that the registries will be available to the FIUs (Financial Intelligence Units), Regulators and any other person able to demonstrate legitimate interest, although no final decision on the access rights was made.
- After the circular of CBC in April 2016 in regard to the need of Commercial Banks to have a Face to Face meeting with their clients (a measure to assist in the restoration of the international image of Cyprus) the evaluation of the ASPs is now more simplified in terms of the annual review and no further evaluation is now required.
- The 10% UBO threshold, which applies in Cyprus (as opposed to the 25% implied in the EU directive) will only be addressed upon the finalization of the 5th EU AML Directive, which addresses the issue again. As per Mr Neoptolemou, it would not be wise to proceed with any amendment at present. The issue is expected to be resolved by the end of the year.
The two parties agreed that a common ground for the risk assessment of the clients of all ASPs and the Banks needs to be developed in order to minimize the differences in this respect among ASPs of any of the 3 regulators. Mr Neoptolemou mentioned that there is an extended Technical Committee with the participation of all regulatory authorities and that this issue can be discussed there. The assistance of the Central Bank is considered important in this respect. Mr Neoptolemou also mentioned that the complications of having 3 regulatory authorities for ASPs were noted during the National Risk Assessment (NRA) process. The NRA is at the finalisation stage and the Central Bank with the FIU are leading the project.
On another note, Mr Neoptolemou stated that the Banks would need to ensure that there is a rational for complicated shareholding structures and this should be supported with the relevant information i.e. tax advise etc.
CFA representatives also enquired whether there are any initiatives/ projects by the Central Bank of Cyprus or other authorities for utilisation of new technologies like Blockchain and Smart contracts for the benefit of Cyprus as a jurisdiction, bringing as an example the Delaware state of the US. Mr Neoptolemou advised that there are some talks about the utilisation of new technologies but are currently at a primitive stage.
Finally, Mr Neoptolemou stated that any matters arising from the implementation of the 4th EU AML Directive, should be promoted with the proper consultation, guidelines and training from all Regulatory Authorities in order to assist the regulated entities and their employees.