Trusts and registries

Following the transposition of the 5th AML Directive into Cyprus legislation, trusts have become an even more appealing option for individuals and companies especially from a confidentiality perspective.  It is well known that in accordance with the Prevention and Suppression of Money Laundering and Terrorist Financing Law (Law 188(I)/2007), as amended (the “Law”), companies registered in Cyprus are obliged to maintain adequate, accurate and up-to-date information concerning their ultimate beneficial owners and file such with the newly established central registry of ultimate beneficial owners administered by the Companies Registry (the “UBO Registry”).  There is a great deal of information submitted with the Companies Registry with respect to each natural person designated as a beneficial owner, including, personal details, nature and extent of beneficial interest and identification document details.

If the corporate structure involves another legal arrangement, such as a trust, then details comprising the name, registration number, jurisdiction of the trust as well as nature and extent of beneficial interest should be submitted to the UBO Registry but this is as far as the reporting obligation to the Companies Registry goes.  The details of the beneficial owners of a trust (consisting in accordance with the Law of the settlor, the trustee, the protector, the beneficiaries and any other person exercising control over the arrangement) are not disclosed with the UBO Registry.  This is where another and new-fangled registry comes into play, the express trusts and similar legal arrangements registry administered by the Cyprus Securities and Exchange Commission (the “Trusts Registry”).  Trustees of trusts managed in Cyprus should submit with the Trusts Registry adequate, accurate and up-to-date information, including, name of the trust, type (i.e., express), country and date of establishment, governing law, ownership or control structure leading to the beneficial owners, personal details of beneficial owners such as name, surname, date of birth, nationality, identification document and proof of address.  The Trusts Registry is not publicly open and one can gain access only if they prove that they have a legitimate interest which is ordinarily connected with combating money laundering and financing of terrorism.  This means that if a trust is involved in a corporate structure then as far as the UBO Registry is concerned only basic details about the trust are submitted while the personal details of the beneficial owners submitted to the Trusts Registry remain private.

For the avoidance of doubt registration with the Trust Registry does not absolve the obligation of registration of trusts with the registry maintained by the Cyprus Bar Association in case of Cyprus law governed trust with trustees who are regulated by the Cyprus Bar Association.  In this case information provided is minimal, concerning mainly the trustees and not the beneficial owners of the trust and again is not publicly available.

With increased regulation and reporting obligations for companies and bearing in mind the significance of privacy and data protection, trusts have become an attractive alternative.  Michael Damianos & Co LLC can provide assistance on a wide spectrum of trust-related matters including advice pertaining to the registration and disclosure of complex structures with the competent authorities.