Cyprus Parliament approves new framework for beneficial ownership compliance

On 21 November 2024, the Cyprus Parliament approved a landmark amendment to the Prevention and Suppression of Money Laundering Activities Law. The legislation introduces a comprehensive framework for the enforcement of penalties related to beneficial ownership compliance, addressing longstanding challenges and providing relief for businesses, especially small and medium-sized enterprises (SMEs).

?Key provisions of the Law

?1.?Reduction in Penalties

• Daily fines for non-compliance with beneficial ownership reporting obligations have been reduced from €100 to €30.
• The maximum total penalty has been lowered from €20,000 to €5,000.
• Future penalties will now be enforced as judicial fines, requiring approval from competent courts.

2. Retroactive Measures

The Department of the Registrar of Companies and Intellectual Property has committed to rescinding previously imposed penalties related to beneficial ownership reporting. This move comes in response to administrative challenges that arose from discrepancies between temporary and permanent registries.

3.Enhanced Compliance Tools

• The Registrar is empowered to seek court orders to compel compliance from entities or individuals failing to meet their obligations.
• Affected parties now have the right to formally contest penalties through objections, ensuring procedural fairness.

4. Policy Commitment

During the legislative debate, assurances were provided by the executive branch that all fines imposed under the previous regime would be annulled. Members of Parliament, including the Speaker, emphasised the government's commitment to implementing the changes effectively.

Context and significance?

The amendments aim to resolve issues stemming from the transition to a permanent beneficial ownership registry, which previously resulted in significant penalties for non-compliance. Thousands of companies were required to resubmit their information, creating administrative bottlenecks and disproportionately impacting SMEs.

The new framework seeks to balance enforcement with fairness by reducing financial burdens while maintaining the integrity of transparency measures critical to anti-money laundering efforts.

Broader implications?

This legislative reform underscores Cyprus’s commitment to fostering a business-friendly regulatory environment while adhering to international standards on transparency and money laundering prevention. By addressing administrative inefficiencies and introducing proportional penalties, the framework ensures that compliance is achievable for businesses without undermining the principles of accountability and transparency.

This initiative represents a pivotal step toward resolving historical compliance issues while reinforcing Cyprus’s position as a transparent and responsible jurisdiction for international business. Businesses and stakeholders can now operate with greater clarity and fairness under the revised framework.

Businesses are encouraged to review their compliance practices and take advantage of the improved processes and appeal mechanisms offered under the new law.

For more information, please contact any of our lawyers in the?AML Compliance and Sanctions?team or at?[email protected]">[email protected]