Quick update for Offshore company and Cyprus bank account opening Aug 2018

[JohnLocke]

The Central Bank of Cyprus issued a circular requesting from local banks to review their‌ existing clients and close accounts of companies that are 'Shell Companies'.

A 'Shell Company' is‍ a company that fulfils any one of the following criteria:

• Has no physical presence in⁠ its country of domicile ( lack of one single person as staff is construed as⁤ lack of physical presence)
  
• Has no establish economic activity, little to no economic value and⁣ no documentary proof to the contrary
  
• Is registered in a jurisdiction where companies are not⁢ required to submit to the authorities independently audited financial statements
  
• Has a tax residence in︀ a jurisdiction recognized as a 'tax haven' and no tax residence whatsoever
  

Exceptions to the︁ above are:

• The company is established for the purpose of holding stock or shares of︂ another business entity with identifiable activities and ownership
  
• The company is established solely for the︃ purpose of holding intangible or other assets including real estate or ship vessels
  
• The company︄ is established to facilitate currency trades and asset transfers, corporate mergers, acts as group treasurer︅ or in any other case where convincing proof can be provided that the company is︆ engaged in legitimate business and substantiated information about its ultimate beneficial owner(s).
  

There were reactions︇ by various professional associations including the Bar Association and the Institute of Certified Public Accountants︈ of Cyprus against this circulars and all parties concerned are currently in discussions hoe to︉ apply or modify this circular and we expect to have clarifications within the next few︊ days.

We are currently opening bank accounts for Cyprus companies with certain banks. Our hope︋ is that at least Cyprus companies will not be affected by this circular.

 

[LoukJack]

I was informed that a new directive was being issued by the central bank of‌ Cyprus last week. Is that something any of you have seen and read ?

 

[John Spectre]

Just came back from one of IBU branch of one bank in Cyprus.
I can‌ confirm that this above list is required for any company.
Exact today bank asked from‍ my company this new list of documents (that was never asked before by bank):
- tax report, for confirm that no tax evasion
- audited financial statement, for confirm correction⁠ of company working
- the fresh documents for the company with confirmation of actual presence⁤ of company (address and employees)

So, actually, not the only offshore companies could be affected⁣ to the problem, but rather *any* company that do not follow above criteria.
For example,⁢ if your onshore, legal, worked company for some reason do not require audited financial statements︀ (because of micro business, not high income, etc) this could be a reason for closure︁ of account.
And as usually during last monthes in the bank, most of customers who︂ came to the branch coming with similar issues of providing above docs, proof of sources,︃ etc. I almost didn't saw any clients with regular banking questions or work. Just this︄ tons of papers.

 

[JohnLocke]

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