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29 November 2018
On 2 November 2018 the Central Bank of Cyprus issued a circular which clarifies dubious and vague information on shell companies and entities in Cyprus and advises banks and service providers on how to deal with them.
As Cyprus remains an attractive jurisdiction for registering offshore entities, the circular's revised definition of 'shell companies' will assist banks when opening accounts for international businesses and corporate service providers.
According to the circular, the term 'shell company/entity' refers to limited liability companies or any other legal or business entities which:
The following companies and economic activities are excluded from the definition of 'shell company':
In addition to the above, banks should avoid engaging in business relationships with companies or entities which:
In all other cases, banks must decide whether to engage in or maintain a business relationship and apply a risk-based approach, in accordance with the legal and regulatory framework of the respective jurisdiction where the company or entity is established.
Considering the above, banks and credit institutions should revise their customer acceptance policies in order to comply with the new circular.
In accordance with the applicable legislation and regulatory framework, banks and credit institutions are reminded of their obligations to conduct all necessary due diligence measures and checks regarding, among other things:
For further information on this topic please contact Angelos Paphitis at A G Paphitis & Co by telephone (+357 25 73 10 00) or by email (email@example.com). The A G Paphitis & Co website can be accessed at www.agplaw.com.
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