The hasty operation of the interim platform to align the Republic with the recommendations of the European Commission may have caused chaos and confusion in recent days regarding the registration of Beneficial Owners’ data in the electronic registry of the Companies Registrar Department.
This conclusion was drawn during yesterday’s lengthy and stormy session of the Parliamentary Committee on Commerce.
Despite many entities entering data into the interim platform, many of them could not be automatically transferred to the new electronic registry.
Companies were required to register the relevant information by the end of 2023, and from January 1, 2024, those who did not comply would face financial penalties.
The Minister of Energy, Giorgos Papanastasiou, himself acknowledged shortcomings in the interim solution/platform, which was implemented, as he said, to avoid EU fines against Cyprus.
He also emphasized a serious flaw in the control of the interim platform’s data.
Furthermore, he admitted that the interim platform could not connect to any other state platform, and there was a serious inability to verify the data.
He also mentioned that the relevant registry was created for transparency and to restore Cyprus’s reputation internationally. He stated that he often feels uncomfortable participating in international meetings, as Cyprus’s name is associated with corruption.
In February 2021, the Parliament approved harmonization legislation to combat money laundering, which included the operation of the Beneficial Owners’ electronic registry.
A representative of the Department of Electronic Communications, which was the contracting authority, stated that the data entered into the interim solution was unreliable and could not be transferred to the new platform.
Furthermore, she mentioned that the data in the interim system had been transferred in PDF format.
IBM, the company responsible for creating the platform, stated that there was no possibility of transferring data from the interim to the final platform since the information entered in the interim was in free text format without the possibility of control.
This provoked the reaction of the Members of Parliament. Stavros Papadouris, a Green Party MP, stated that he would raise the issue for discussion in the Parliamentary Control Committee, emphasizing that “the State has implemented an electronic system for bureaucrats to print papers,” as he said.
The Registrar of Companies, Irene Mylona Chrysostomou, noted that the opportunity was given to enter data without the possibility of quality control due to tight schedules.
She even mentioned that when the final electronic registry was operational, the data entered in the interim platform was not useless. In this regard, the minister noted that “when we created the platform, it was to operate a small registry; we did not intend to go to a platform that operates differently.”
She also said that the data submitted by companies in the interim solution was not compatible with the new system and could not be accepted. She concluded by saying, “Everything happened very quickly. Let’s tone down and behave seriously.”
Following all these events, the Minister of Energy made a political decision to extend the deadline until March 31 for all companies, including trusts, to enter the data of the Beneficial Owners in the electronic registry.
It is reminded that for 5,000 entities, no extension was granted with the previous decision of the Companies Registrar Department, as they had not submitted the data to the electronic platform that operated as an interim solution before the final electronic registry was implemented earlier this year.
Until Friday, the Legal Service will provide its opinion to the Companies Registrar Department regarding the €2 million fines imposed since the beginning of the year on entities that have entered Beneficial Owners’ data.
According to the law, a fine of €200 is imposed for not registering the information and €100 for each day the violation continues.
The maximum fine that can be imposed amounts to €20,000.
A representative of the Legal Service, speaking to the Parliamentary Committee on Commerce, stated that the Service will provide its opinion within the next few days.
At the same time, there are considerations from the Ministry that companies may not accept the fine before proceeding with the registration of the data in the new system of the Registrar.
