Until recently Cyprus International trust was confidential. With no reporting, financial audits and particular public disclosures secrecy and anonymity was ensured. For the following reasons Trusts were designated as high-risk vehicles by the Central Bank of Cyprus and CySEC for many years; that is until the recent amendment of The Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007-2018 (unofficial consolidation up to 13(I)/2018 and unofficial translation) which allowed supervised entities to apply a risk-based approach.
Nevertheless in order to ensure that trustees are accountable for the trusts that they control the following mandatory public disclosures are in effect:
Stamp Duty Commissioner for validating the creation of the Cyprus International Trust
For a trust to be validly constituted it must be presented to the commissioner of stamp duty and a one-time payment of Euro 430 is made. The commissioner does not keep a copy of the document.
Regulatory Disclosure of ASPs managing a Cyprus International Trust
The regulation of the industry providing company and trust management functions (ASP) has also brought about the requirement to disclose to the regulator the existence of a Cyprus International Trust. Such obligation burdens the trust company and the information disclosed is the following:
- The date the trust was created
- The name of the trust
- The name and particulars of the trustee
- The governing law of the trust
For the avoidance of any doubt, the regulator does not require particulars of the Settlor, the Beneficiaries and details of the trusts. Neither does the regulator store in any way the trust deed. On the contrary, they relly on the regulated entity to collect, store and update this information
Cyprus Beneficial Owner Register and Cyprus International Trust
The Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007-2018 introduced mandatory disclosure requirements in respects to trusts. Generally known as the Cyprus Beneficial Ownership Register which you may read more in my previous post. Subject to this the following information will be required to be mandatorily disclosed:
- The settlor
- The trustee
- The protector
- The beneficiary or the class of beneficiaries if they have not been identified yet
- Any other person exercising control over the trust
The actual implementation of this law still remains to be seen however the requirements above are expressly extracted from The Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007-2018.
Under the Foreign Account Tax Compliance Act (FATCA) a Trustee and or a Trust may be classified as a Foreign Financial Institution (FFI) requiring registration with the IRS and disclosure of results on a yearly basis.
Under the Common Reporting Standard decree, a trust would in most cases classify as either a Reporting Financial Institution (FI) or a Passive Non-Financial Entity (Passive NFE). If the trust is an FI the trust or the trustee will have an obligation to report to its local tax authority in Cyprus in respects to the reportable accounts.