Category: Newsletters

April 19, 2021

The 5th AML Directive

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The Cyprus House of Representatives on the 18th February 2021 has enacted the long-awaited amending law to the Prevention and Suppression of Money laundering and Terrorist Financing Law 188(I)/2007 thus fully implementing EU Directive 2018/843 of the European Parliament and of the Council of 30 May 2018, (“the 5th AML Directive”).

This new enactment, (“the new Law”), implements the provisions of the 5th AML Directive that were not already implemented so far into Cyprus Law. With this new Law, the 5th AML Directive is now fully implemented in Cyprus.

The key amendments brought forward by the New Law are the following:

  1. Extending the Scope

The 5AMLD extends AML/CFT obligations to new assets being managed such as:

  • Virtual Currencies:  increasing the scrutiny on virtual currencies and extending the scope of AML/CTF controls in the 4MLD to virtual currency providers, to notably prevent anonymity. Anonymous safe deposit boxes will also no longer be allowed.
  • Art Traders: When dealing with high-value artwork that results in a transaction of €10,000 or more, art traders will have to report suspicious activity and perform checks on customers when necessary

2. Beneficial Ownership Registers

The following Beneficial Ownership Registers are set up granting access, under certain conditions, to the public. The EU companies have the obligation to have available the information as to their Beneficial Owners and record it accordingly in the relevant register.

The registers to be set up are:

a. The Companies’ Register kept with the Registrar of companies. This register will be open to the public and relevant information, as identified in the Law will available.

b. The Express Trusts and Similar Legal Arrangements Register kept with CySEC. This register will NOT be opened to the public but it may be accessible to those of the public who can prove their legitimate interest so that the relevant information is disclosed to them. Relevant procedure will be laid down.

c. The Register of legal bodies, other than those registered with the Registrar of Companies, such as, clubs, foundations, federations and unions. This register will be kept with the General Commissioner. This register will be open to the public and relevant information, as identified in the Law, will be available.

3. Creation of the Service Providers of Cryptoassets register

A service providers’ of cryptoassets register will be created. This register will be kept by CySEC and will be open to the public. A service provider of cryptoassets to be included must file the relevant application and meet the conditions set down by CySEC.

4. Creation of Electronic Registry of Bank Accounts, Payment Accounts and Safe Boxes

The New Law provides for the creation of a central electronic registry which will allow the timely identification of any natural or legal person holding or controlling bank or savings accounts and safe deposit boxes. This information will be directly accessible by the Police and by MOKAS as well as by the Customs and Excise Department and by the Tax Authorities.
The Central Bank will be responsible for the creation of the Register and its operation.5. Electronic Money Payments

The New Law lowers the threshold for identifying holders of prepaid cards from 250 Euro to 150 Euro. The threshold for electronic money online transactions with prepaid cards is now lowered to a maximum of 50 Euro.

5. Enhanced Due Diligence for High-Risk Third Countries

The EU currently maintains a list of High-Risk third countries, and when doing business with clients within these countries, parties are required to undertake enhanced due diligence measures. One of the new updates that the 5AMLD brings, is that any client that is based in a High-Risk country is now subject to compulsory enhanced due diligence measures, of which the ‘relevant person’ must undertake. These include obtaining information on the source of funds, background checks and beneficial ownership to name just a few. Member States may also prevent firms from opening branches or subsidiaries in high-risk third countries and prevent the opening of a branch or subsidiary of a firm based in a high-risk third country.

This change aims to harmonise the rules concerning high-risk jurisdictions across the Member States. The EU hopes to ensure greater coordination and encouragement of firms to limit relationships with these countries.

6. Politically Exposed Persons (“PEPs”)

Under the New Law, Cyprus will be required to outline a list of offices and functions that qualify as politically exposed (PEP) on the national level and including nationally registered international organizations; the EU will draft a corresponding list on EU level, consolidate the national lists from member states and publish the result.

We’re here to help

The 5AMLD is now in force and firms are now required to take the appropriate steps to incorporate the additions to their compliance landscape, however, if there are any questions relating to the above, or on a wider scale, we are here to help.

August 28, 2020

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Law Regulating Companies Providing Administrative Services and Related Matters N196(I)/20212 # Newsletter 08/20

The Law Regulating Companies Providing Administrative Services and Related Matters N196(I)/20212 was amended so that the preparation and management of the application for a residence permit or naturalization under the current Cyprus Investment Program falls under the definition of an administrative service for the purposes of the law. 

The amendment is included under Article 4 ‘Administrative Services’, paragraph (c) of subparagraph (1) of the Amending Law 114 (I)/2020.

Cyprus Citizenship: Parliament adopted changes to the programme # Newsletter 08/20

The Parliament of Cyprus adopted new rules for the citizenship programme for investment. The amendments are aimed at improving the screening of applicants and changing requirements in line with the interests of the country.

The Parliament discussed changes to the citizenship program for investments on Friday, July 31. As a result of the voting, 2 draft laws and the updated rules of the program were adopted. The texts of laws and regulations have not been published yet, but some changes are known.

Proposed amendments

  • The investor and his or her family members (spouse, children, parents) will be able to participate in the program simultaneously. Earlier, the investor and his spouse applied. The rest of the family members joined the application after the investor’s approval.
  • Parents of the investor’s spouse will be able to participate in the program. Previously, only the parents of the investor were allowed to join the application.
  • The amount of gratuitous contributions will increase from €150,000 to €200,000.
  • It will not be possible to participate in the program for politically exposed persons who held public office for 12 months prior to submitting an application. Previously, the term was 5 years.
  • The number of employees, whose employment is provided by the applicant when investing in business, will increase from 5 to 9 people.

The new rules of the program, which the government submitted to the parliament for consideration provided for :

  • tightening Due Diligence and screening of applicants in accordance with EU anti-money laundering legislation;
  • simplifying the procedure for cancelling the citizenship of investors who are found to have violated the rules of the program.

The variety of investment options and minimum amounts were to be left unchanged.

There was also a restriction on the issuance of passports to investors – up to 700 per year.

The new rules of the Cyprus Citizenship for Investment Programme will improve the reputation of the country’s passports. For investors, this means greater opportunities, and increased trust from business partners.

Submission to the Department of Registrar of Companies and Official Receiver of the 2020 Annual Report # Newsletter 08/20

Following the Department’s Announcement, dated 23rd March 2020, concerning the “Measures to assist companies affected by the restrictive measures imposed to limit the spread of the Coronavirus”, and in particular with regards to the measure of the submission of the 2020 Annual Report, the Department has announced that the Annual Report with date of preparation from 01st January 2020 until 31st December 2020 can be submitted to the Department until 28th January 2021, without imposing the fee of €20 for overdue submission.

Payment of Special Levy for the year 2020 # Newsletter 08/20

The Department of Registrar of Companies and Official Receiver announced that the Special Levy for the year 2020 will remain €350 until the 31st December 2020 without the imposition of additional charges.

August 28, 2020

The Basel AML Index

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General Circular 14/2020 regarding the publication of the Basel AML Index 2020 ranking money laundering and terrorist financing risks around the world # Newsletter 08/20

The Basel AML index is published annually since 2012 and it remains the only independent, research-based index by a non-profit organisation ranking countries according to their risk of money laundering and terrorist financing (ML/TF).

The Basel AML Index measures the risk of ML/TF in countries around the world. Risk is defined broadly as a country’s vulnerability to ML/TF and its capacities to counter it. It does not measure the actual amount of ML/TF activity in a country.

Risk scores are based on data from publicly available sources such as the Financial Action Task Force (FATF), Transparency International, the World Bank and the World Economic Forum. They cover 16 indicators in five domains relevant to assessing ML/TF risk at the country level:

  • Quality of AML / CFT Framework
  • Bribery and Corruption
  • Financial Transparency and Standards
  • Public Transparency and Accountability
  • Legal and Political Risks

The Basel AML Index ranks countries based on their overall scores, capturing the complex global nature of ML/TF risks and providing useful data for comparative purposes. However, the primary objective is not to rank countries superficially in comparison with each other, but to provide an overall picture of different countries’ and regions’ risk levels and their progress in addressing vulnerabilities over time.

The Basel Institute has conducted extensive research in calculating the risk scores following academic best practice. The methodology is reviewed every year by an independent panel of experts to ensure that the ranking is accurate, plausible and continues to capture the latest developments in ML/TF risks.

The Basel AML Index follows the World Bank classification of countries, with an additional separation of Europe and Central Asia into two regions:

• European Union and Western Europe

• Europe and Central Asia

• East Asia and Pacific

• Latin America and Caribbean

• Middle East and North Africa

• North America

 • South Asia

• Sub-Saharan Africa

While each country has different risks, we do see particular trends and problem zones in each region that help highlight weak links and areas to address.

Global money laundering risks remain high, with an average in the 2020 Basel AML Index of 5.22 compared to 5.39 in 2019. Few countries are making dramatic progress in addressing these risks. In fact, only six countries improved their risk scores by more than one point. 35 countries went backwards.

Of course, major shifts in global risk patterns cannot be expected from one year to another. What’s interesting, when a phenomenon is stagnant like this, is to really drill deeper into the underlying causes. One area in which countries score poorly across the board is the quality of AML/CFT supervision.

The factors which contribute to ineffective supervision have been identified as follows:

  • Limited powers to sanction non-compliance by civil or administrative means. This leaves only criminal prosecution, for which the bar is typically high.
  • Limited resources including qualified staff, processes, IT systems and tools.
  • Risk-based approach is not applied meaning supervision is not commensurate with the risks and the size of the financial centre and the number and intensity of reviews are not aligned with existing risks.
  • Poor coordination between competent authorities on supervision, with individual agencies focused only on their sectors.
  • Insufficient guidance on ML/TF risks provided by supervisory body to reporting entities.

The example of analysing the quality of supervision and its role with respect to the overall effectiveness of AML/CFT systems is also very pertinent to demonstrate that numbers should never be taken at face value. Policymakers and analysts will need to consider features of the FATF methodology (including for effectiveness) before drawing conclusions. In addition, they need to look not only at the overall scores or at individual sub-indicator scores, but also at how the scores in different sub-indicators relate to each other and may mutually influence each other.

By way of example, the data shows that jurisdictions that are scoring well with respect to the effectiveness of supervision often score poorly in the category political and legal risks. What does that mean for the quality and manner in which the supervisory regimes operate and are executed?

Another comparison which could be looked at, again at the level of sub-indicators and their interrelation, is that countries that score poorly on political and legal risks often score quite strongly with respect to the effectiveness of their AML/CFT regimes, especially in terms of case numbers and sanctions.

In other words, where countries score at highly opposite ends of the spectrum on certain sub-indicators, we need to look beyond the overall score in order to make sure we draw the right conclusions and, as a consequence, are promoting the right reforms to further advance that country’s AML/CFT performance.

July 27, 2020

Creating a Culture of Ethics and Compliance in the Workplace #Newsletter 07/2020

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Culture is arguably the most beneficial asset a business can have: it can impact on performance, reputation, profit and growth in equal measure

So much has been written about culture in recent years that we are in a position now where most businesses and business leaders understand its value. Compliance culture is a really important element that can impact on the wider cultural challenges that a firm could face. Your long-term success as a company strongly relates to how well you’ve managed to define your ethics and compliance, both inside and outside the organizational structure. A mistake made by many businesses – small or large – is to leave this in the realm of the abstract.

In a business environment where reputational threats lurk around every corner, a strong culture of ethics and compliance is the foundation of a robust risk management program. The lessons learned related to scandals and organizational crises that trace back to the early 2000s make one thing clear: without an ethical and compliant culture, organizations will always be at risk. More and more, culture is moving from a lofty concept to something that should be defined, measured, and improved.

Culture is the foundation

Global Consultants Ethics and Compliance Framework recognizes that an ethical culture is the core element of an organization’s ethics and compliance program. If the culture of the organization does not support principled performance, then all of the people, processes, and technologies that are put in place to mitigate ethics and compliance risks cannot be effective.

A code of ethics provides companies and employees a structure on which to build an organizational culture of accountability and transparency. While in some cases, the law already covers conduct within the workplace, companies can take this extra step to establish a code of behavior inside the workplace.

That means there’s less room for mistakes, as both employees and employers have a set of guidelines to respect. Furthermore, having a clearly defined organizational culture can help improve employee performance even in the management sector, particularly when the set of values reinforced within the code of conduct is in line with the individual’s own set of values.

Culture has always been important to how organizations operate. So why is it getting so much attention lately? One reason is that Regulators have come to the realization that without a culture of integrity, organizations are likely to view their ethics and compliance programs as a set of check the-box activities, or even worse, as a roadblock to achieving their business objectives. In fact, organizations responsible for some of the most nefarious acts of misconduct have had quite impressive, formalized ethics and compliance guidelines.

Grounding a culture in integrity

There were some common messages with regard to culture that many companies integrated into their ethics and compliance programs:

  • Emphasis on organizational values: a set of clear values that, among other things, emphasizes the organization’s commitment to legal and regulatory compliance, integrity and business ethics.
  • Tone at the top: executive leadership and senior managers across the organization encourage employees and business partners to behave legally and ethically, and in accordance with compliance and policy requirements.
  • Consistency of messaging: operational directives and business imperatives align with the messages from leadership related to ethics and compliance.
  • Middle managers who carry the banner: front-line and mid-level supervisors turn principles into practice. They often use the power of stories and symbols to promote ethical behaviors.
  • Comfort speaking up: employees across the organization are comfortable coming forward with legal, compliance, and ethics questions and concerns without fear of retaliation.
  • Accountability: senior leaders hold themselves and those reporting to them accountable for complying with the law and organizational policy, as well as adhering to shared values or organizational values.
  • The hire-to-retire life cycle: the organization recruits and screens employees based on character, as well as competence. The onboarding process steeps new employees in organizational values, and mentoring reflects those values. Employees are treated respectfully when they leave or retire;
  • Incentives and rewards: the organization rewards and promotes people based, in part, on their adherence to ethical values. It is not only clear that good behavior is rewarded, but that improper behavior—such as achieving results regardless of method—can have negative consequences.
  • Procedural justice: internal matters are adjudicated equitably at all levels of the organization

While a strong office culture won’t necessarily change people’s values, it can influence the way they behave within the workplace. Organizations with strong positive cultures create trusting relationships with stakeholders. In our experience, those relationships become reciprocal; that is, stakeholders trust the organization and the brand. This creates employee, customer and supplier loyalty. A strong culture helps to build positive relationships with regulators and it helps attract long-term customers. Ultimately, a culture of integrity is reflected in superior, long-term performance.

None-the-less, creating an effective compliance program requires companies to go beyond a list of written rules. It requires instilling a top-to-bottom environment of achieving business goals with a commitment to compliance. It involves using compliance monitoring tools to identify and mitigate potential risk such as risk management systems, data analytics and company wide open reporting.

In addition, employees must be properly trained on a firm’s internal policies and external regulations, and this understanding should be reviewed periodically to embed the learning. Live and online training helps employees believe to their core that their conduct is right for the company, right for them, and something to be proud of. Indeed, today’s employees’ value corporate culture more than ever.

Written by Elena Panayiotou on Monday 21st July 2020

July 27, 2020

New Strategic Partnerships! #Newsletter 07/2020

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We are pleased to announce that Global Consultants has entered a strategic partnership with a leading regulated financial institution in England and Wales. The partnership will enable Global Consultants clients to benefit from global access to over 140 currencies, institutional levels of pricing and execution and competitive spreads in foreign exchange trading.  Same day account set up and payment processing is also available.

We have also affiliated with one of the largest alternative investment managers in Cyprus comprised of real estate, credit and private equity managers. Throughout our affiliate we provide investment services to high net-worth individuals, international companies and institutional clients, assisting them in structuring and managing their global investments and wealth. Managed investments in real estate, credit and private equity.

Another new collaboration has been formed with one of the leading regulated financial institutions in the UK.We can assist you in obtaining mortgages and bridging loans for purchasing of commercial and residential property in the UK. Mortgages up to 80% of the value of the property at very low interest costs.

January 9, 2020

What Role Does an Accountant Play in Business Operations #Newsletter 02/2020

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An accountant performs financial functions related to the collection, accuracy, recording, analysis and presentation of a business, organization or company’s financial operations.

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January 2, 2020

What is accounting and why do i need it? #Newsletter 01/2020

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Accountants have been around for just about as long as humans have engaged in trade and commerce. This makes sense, because if we want to do business with each other in any kind of organized way we need a system to keep track of all of these exchanges. And that’s where accounting comes in. Double-entry bookkeeping emerged in Medieval Europe and has been used by business big and small ever since. Thankfully, today we have handy accounting software to help us manage our financial records and no longer have to rely on manually- completed ledgers and spreadsheets.

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December 13, 2019

New start up companies #Newsletter 01/2019

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Cyprus has one of the youngest populations and workforce in the European Union (EU). The country has a strong and fast-growing education system. Since 2000 enrolment in Cypriot universities has grown faster than in any other EU country. Almost half (46%) of the workforce has a tertiary degree, one of the highest percentages in the EU. Many Cypriots further strengthen their education by studying abroad — more Cypriots earn degrees from foreign universities than citizens of any other  EU country. Cyprus has a booming private education sector. A greater proportion of students go to privately funded and managed schools than any other country in the EU.

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