Dear client,
We would like to inform you that BRP has updated its COUNTRY MANUAL PRIVATE BANKING for the following jurisdiction:
CYPRUS OUT OF BANK’S COUNTRY OF ESTABLISHMENT (Def, RS, BT & RT)
| SOURCE OF CHANGES | ANSWERS |
| Law/Regulation | NO |
| New Position of the Authorities | NO |
| Evolution of Expert’s interpretation | YES |
Regulatory Template, Regulatory Summary and Behaviour Template
Material changes
The Country Manual has been reviewed to ensure that the content of all the documents remains accurate and up to date. While there have been no major material changes or modifications in the relevant Cypriot regulation since the last update and the approach taken by the manual remains the same, local experts urge caution regarding the following activities:
Banking activities upon a prospect’s request via remote means of communication:
The CBC has not officially recognised reverse solicitation as an exemption to the licensing requirement for banking activities conducted upon a prospect’s/client’s request via remote means of communication. While to date, such activities seem to continue being tolerated, there are no formal rules or official practice and a foreign unlicensed bank must be aware of the risks associated with this activity.
Offering e-banking access on Cypriot territory:
Although offering online access to an existing account is not considered to be a separate (financial) service, offering online access during onsite meetings in Cyprus, whether actively or upon a client’s request, remains a grey zone and, if performed at all, should be limited to an occasional basis.
Investment activities upon a prospect’s/client’s request on Cypriot territory:
Section 43 of the Investment Services Law, which implements Article 42 MiFID II into Cypriot law, does not define a territorial scope. According to local experts, the Cypriot authorities are generally known as formalistic, stringent, and as closely adhering to ESMA’s soft law and guidance. The performance of investment activities on Cypriot territory, even upon request, may therefore be treated by the authorities as a regulated activity under Cypriot law. For this reason, and due to the lack of official guidance or practice, the promotion, negotiation and performance of investment services by a foreign unlicensed bank on Cypriot territory, even upon a prospect’s/client’s request, remains a grey zone. If any such activity is performed at all, it should be limited to a strictly occasional basis and the Bank must be aware of the risks involved. A very cautious approach should be taken.
Non-material changes
Some comments/conditions have been reworded and further non-material changes have been made throughout the documents.
Implications for business relations with third parties
The third-party section has been updated. Specific amendments have been made in particular concerning remuneration for the services of third parties. Even the payment of remuneration as such may be interpreted by the Cypriot authorities as the third party acting as a de facto agent for the foreign unlicensed Bank. If remuneration is paid at all, a very cautious approach should be chosen. A foreign unlicensed Bank should avoid remuneration agreements based on the volume of client assets or based on the revenues generated by the client assets.
With respect to the provision of documentation to the EAM (such as documentation on the Bank’s banking and investment services, investment research and financial analysis or recommendation lists), our Country Manual now distinguishes between the provision to the EAM for remittance to the end client on one hand and the provision to the EAM for the EAM’s own professional purposes on the other hand. The answers have been amended accordingly.
Regulatory Summary
This document has now a more user-friendly layout and reflects the changes contained in the RT.
BT Short Comparison
BRP has created a comparison document allowing users to quickly identify the modifications made compared to the previous version of the PB Manual (BT Short Comparison). The BT Short Comparison can be found on BRP’s platform (mybrponline) in the Search tab by entering in the Document Field “CM PB BT SHORT COMP” and “CYPRUS” in the Target Country Field.
The BT Short Comparison should be read as follows:
The first column contains a short description of the activity in question. The second column contains the answers of the previous version of the Country Manual (online until the day of the alert). The third column contains the new answers of the most recent version of the Country Manual. Only the modified answers are displayed (in color). If the answers in the new version are unchanged compared to the previous version, they are shaded in grey.
For more information, please contact us: info@brpsa.com
Best regards,