Cypriot Central Bank Continues To Reassure Russian Businesses Over Disclosure

by Lorys Charalambous, Tax-News.com, Cyprus

27 March 2003

The Cypriot Central Bank sought to calm fears Wednesday after suggestions by the Russian Federal Securities Commission that it had been overly generous in disclosing information on Russian business in the territory.

The controversy broke when unconfirmed reports in the Russian media quoted FSC chairman, Igor Kostikov, as announcing that: 'the Central Bank of Cyprus is giving the Federal Commission for the Securities Market of Russia all the information relating to the beneficial owners of Russian companies registered in Cyprus'. This caused much upset among the well established Russian business community in Cyprus and prompted many of them to call the Central Bank direct to demand that their privacy rights be upheld.

The Central bank looked to settle the crisis by issuing a statement on its website. It particularly emphasised the fact that the disclosure laws between Russia and Cyprus only applied to firms offering financial services to the public, and did not extend to ordinary Russian businesses operating outside of this sector.

"Its sole purpose was to regulate the provision of financial/investment services to the public at large by Russian owned companies established in Cyprus and by Cyprus owned companies established in Russia," said the Central Bank statement of the Memorandum of Understanding signed between the two countries in 2002.

"The provision of financial/investment services to the public at large has to be governed by full transparency as regards the beneficial ownership of companies which wish to provide such services," the statement continued.

The fall-out from this incident is likely to continue in the days ahead as the Central Bank try to establish exactly what Kostikov said. Reports suggest that the Bank has formally contacted the FSC requesting it to clarify his statement.

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