Banking, Financial Services & Investment Funds
The Cyprus financial services sector is diverse, comprising domestic banks, International Banking Units (IBUs), insurance companies, and other companies that offer financial intermediation services. Many foreign banks from the Middle East, Europe and Asia operate subsidiaries, branches or representative offices in Cyprus.
Cyprus banking & financial services sector legislation is in line with international best practices and has a simplified, effective and transparent tax system, which is fully EU, OECD, FATF and FSF compliant. Commercial banking arrangements and practices follow the British model, all banks maintain correspondent networks around the world and are able to carry out both traditional and specialised financial transactions.
Banks located in Cyprus offer an array of services ranging from asset management, private banking, international, corporate and investment banking, retail banking, syndicated loans, custodian services and more. In line with business changes, Cyprus’ banking infrastructure has rapidly evolved and adopted the use of advanced technology systems, implemented measures to improve risk management along with the acquisition of highly-trained personnel.
Cyprus has a business-friendly tax system, which provides specific exemptions and incentives for investment. Even after the Eurogroup’s decision (March 2013), Cyprus retains its competitive advantage as a financial centre.
- All banks maintain correspondent networks around the world and subscribe to SWIFT, Reuters, Telerate and other services
- The Cyprus banking and Financial Services sector is consisting of the domestic banks, the Co-operative Credit Institutions (CCIs), the former International Banking Units (IBUs), insurance companies and other companies that offer financial intermediation services
- Many opportunities exist in financial products and services such as fund registration, administration and management
- Legal and banking structures (still) reflect Bristish equivalents
- Unique opportunities for cross-border and international transactions of private as well as public investment funds through reliable infrastructure and low costs
- Foreign operations of Cyprus Banks
Bank Statistics (2014)
- 5 Domestic Banks
- 5 Subsidiaries of foreign banks from EU member states
- 3 Subsidiaries of foreign banks from non EU member states
- 9 Branches of foreign banks from EU member states
- 16 Branches of foreign banks from non-EU member states
Source: Central Bank of Cyprus
Various regulatory authorities are involved in the monitoring of all financial institutions
- The Central Bank of Cyprus, an autonomous institution established in 1963, is the supervising authority of the banking system in Cyprus
- The Central Bank of Cyprus follows the Basel Committee and European Union banking regulation directives. In January 2008, the Central Bank of Cyprus was integrated into the Eurosystem under the European Central Bank
- The Cyprus Securities and Exchange Commission
- The Co-operative Credit Societies’ Supervision and Development Authority
- The Commissioner of Insurance Companies (Ministry of Finance)
- Insurance Services Law
- Authority for the Supervision of Pension Funds (Ministry of Labour and Social Insurance)
- Cyprus has adopted International Financial Reporting Standards over three decades and has passed Anti Money Laundering legislation (Law188(I)/2007)
- Transparency Law
- Anti Money Laundering Law
- Association of Cyprus Commercial Banks
- Association of International Banks - Cyprus
- Insurance Association of Cyprus
Compliance and Transparency
Cyprus combines ease of doing business with a fully transparent and stable regulatory framework. As a European Union member, Cyprus adopts International Financial Reporting Standards (IFRS), Accounting and Auditing Standards. Even before joining the EU family, Cyprus had in place both the legislation and a body responsible for the supervision of monetary transactions within its jurisdiction, also establishing the Unit for Combating Money Laundering (MOKAS).
Among the many tools used to ensure a high level of compliance and transparency are the following:
- The Law Regulating Companies Providing Administrative Services and Related Matters, including a public register of licensed practitioners, a mandatory register for trusts and licensing requirements for all administrative service providers (ASPs), such as fiduciary agents.
- For auditors, the competent authority for all measures to prevent money-laundering and terrorist financing is the Institute of Certified Public Accountants of Cyprus (ICPAC). For lawyers it is the Cyprus Bar Association, for banks and credit institutions it is the Central Bank of Cyprus, while for other providers it is the recently expanded Cyprus Securities and Exchange Commission (CySEC). All the authorities meet a number of times a year to share observations and best practices.
- Central to the new legal framework is the “risk-based approach”, with rigorous know your client (KYC) and due diligence procedures, effective record-keeping and robust channels for reporting suspicious activities. The competent authorities monitor, review and conduct onsite visits to ensure that the procedures are effective.
From January 2017 Cyprus will be one of the “early adopters” of the Common Reporting Standard (CRS)—the first group of countries to implement the standard on automatic exchange of financial information.
Cyprus has been implementing the US-based FATCA on the automatic exchange of financial information since January 2016. It has exchange of information agreements on tax rulings with 96 countries and of course it fully adopts all EU AML directives.
All new double tax treaties are concluded according to OECD standards and include exchange of information clauses.