Cyprus begins the fight against offshores

On June 14^th , the Central Bank of Cyprus issued an internal instruction announcing new requirements for business relations with companies.

The Central Bank informs banks about the upcoming revision of the Directive on the Prevention of Money Laundering and the Financing of Terrorism: it will include the official definition and criteria of shell companies.

These will include legal entities that are characterized by at least one of the following features:

a) the company does not have a physical domicile in its country (other than the mailing address);

b) the company does not conduct economic activities that lead even to insignificant independent economic value, and does not have documentary evidence to the contrary;

c) a company is registered in a jurisdiction that does not impose an obligation on companies to submit audited financial statements to authorized bodies;

d) the company has tax residency in a jurisdiction recognized as a “tax haven” or no tax residency at all.

Moreover, the presence in the country of registration of third parties, such as a lawyer, accountant, provider of trust and corporate services, acting simply as agents of the company, will not be sufficient to consider this a “physical presence” of the company.

Currently, while the directive has not been issued, Cypriot banks should review their entire client base, assess the future of such business relations and inform the Central Bank of Cyprus of the results of this review by July 31^st, 2018.

On materials of the following website: https://www.rbc.ru/finances/16/06/2018/5b2430339a7947d9d36ef216