Investment Services Sector in Cyprus

Cyprus’ financial services sector continues to expand in terms of size, reputation and attractiveness, backed by a resilient regulatory framework, prudent supervision, consumer protection, and strong anti-money laundering mechanisms. Cyprus is fast becoming one of the top emerging investment fund centres in Europe thanks to its continuous efforts to upgrade its legislative and regulatory regime, which is backed up by its strong network of financial and professional services providers. Determined to stay at the forefront of industry developments and offering unique access to high-growth markets, as well as a professional and cost-efficient jurisdiction for funds, the country has developed into a key regional domicile for investment funds and asset managers. The country’s population is one of the most highly educated within the EU, and the expertise of its service providers has established Cyprus as a location of choice for international fund promoters and investors seeking secure and advantageous fund solutions. (Source: Cyprus Investment Funds Association Annual Review 2018)

Advantages of Cyprus

Although the regulatory power was previously shared between CySEC and CBC, with the implementation of the Cyprus Securities and Exchange Commission Law of 2001, CySEC became the supervisory authority of the Cyprus Investment Firm and its mission is to exercise effective supervision to ensure investor protection and the healthy development of the securities market. The powers that the CBC retains are mainly concentrating on:

    • Demand information from any person and, if necessary, summon and question them
    • request telephone and data traffic records
    • demand cessation of any practice that is contrary to the provisions of the law
    • request the freezing and/or the sequestration of assets
    • temporarily prohibit the exercise of professional activity
    • adopt any measure to ensure persons under their supervision continue to comply with the requirements of the law and any associated directives
    • carry out on-site inspections
    • allow auditors or experts to carry out verifications or investigations

Each of the two supervisory authorities, CySEC and the CBC, is responsible for supervision under EU directives and regulations, including the exchange of any information that is essential or relevant to the exercise of their functions and competencies. In addition, they also cooperate with every other competent authority in the Republic responsible for the supervision of pension funds, insurance and reinsurance intermediaries and insurance undertakings. Currently CySEC regulates:

      • Cyprus Investment Firms (CIFs),
      • Cyprus branches of Investment Firms (Ifs) of other EU member-states,
      • Tied Agents of CIFs,
      • UCITS funds,
      • UCITS Management Companies,
      • AIFs,
      • AIFMs,
      • Regulated Markets,
      • Central Counterparty Clearing House (CCPs) of over-the-counter (OTC) derivatives and
      • Trade depositories of over-the-counter (OTC)

Together with the competitive, modern and transparent financial and regulatory framework, the attractive tax environment classifies Cyprus as an attractive place for establishing an investment firm offering investors one of the most significant advantages, a “single passport” (taking into consideration the local requirements or restrictions of certain European countries) to provide investment services across the European Union. Companies in Cyprus have full access to European markets and EU trade agreements and as part of the European Single Market, enjoying free movement of services and capital. Furthermore, Cyprus has a strategic geographic location, at the crossroads of Europe, Asia and Africa, offering a gateway to the Middle East, India and China.

Strong Service Provision

 

There is already a number of recognised financial service providers established in Cyprus, ranging from global names to local independent operators servicing all types of financial operations at very competitive rates.

The below chart presents other important advantages for Cyprus


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