Officials have announced they are drafting legislation to give authorities the power to block company registrations on national security grounds, particularly targeting entities controlled by non-EU nationals. This move primarily stems from rising concerns over companies with Turkish ultimate beneficial owners (UBOs) operating within the Republic.
- Notably, companies controlled by non-EU beneficiaries but incorporated in Cyprus or the EU are classified as domestic entities, complicating the regulatory landscape further.
In a session at the parliament, it was highlighted that there have been instances of companies registered in Cyprus where the UBOs are Turkish nationals. Edek MP Marinos Sizopoulos raised alarms regarding two significant risks: potential espionage and the acquisition of real estate by companies linked to Turkish interests.
Irini Mylona-Chrysostomou, the Registrar of Companies, underscored the seriousness of the situation, confirming ongoing attempts by individuals with Turkish connections to register businesses. The Registrar ensures that any such cases are carefully reviewed in collaboration with district officers before granting registration.
Current legislation mandates that Turkish nationals who are UBOs of companies in Cyprus must disclose their details in the central Register of Beneficial Owners. This framework, in line with EU Anti-Money Laundering directives, aims to identify individuals holding substantial shares or exercising control over companies.
An official from the attorney-general’s office indicated that feedback is being provided on two bills drafted by the government. One bill pertains to corporations, while the other addresses partnerships among individuals. The corporate bill aims to regulate company registrations, transfers to different jurisdictions, and changes in company officials. It would empower authorities to remove companies from the registry when national security is at stake.
Diko MP Zacharias Koulias, chair of the House audit committee, expressed concern that the situation has been largely ignored for years. He urged for prompt action, stressing the importance of passing the legislation before the House dissolves in April for legislative elections.
Akel’s Christos Christofides warned that the authorities are already behind in addressing these issues. He stated, “The situation is not at the eleventh hour; we’re way past it,” emphasizing that the increasing acquisition of land by non-EU nationals poses a threat to national sovereignty.
There has been a noted increase in foreign nationals purchasing real estate near sensitive areas, including airports, military camps, and the ceasefire line. In parallel, political parties have proposed three bills aimed at restricting real estate acquisitions by foreign nationals.
Both MPs and government officials acknowledge that existing legislation regarding foreign property acquisition is outdated and needs substantial reform. The current laws contain numerous loopholes, resulting in virtually no restrictions on foreign ownership.
A recent report from the auditor-general revealed that an increasing share of property sales in Cyprus is attributed to non-EU nationals, including buyers from Lebanon, Israel, Russia, and China. The report estimated that foreign nationals accounted for over a quarter of all property sales in 2024, although this figure might be understated as it did not include Cyprus or EU companies with foreign interests.
Notably, companies controlled by non-EU beneficiaries but incorporated in Cyprus or the EU are classified as domestic entities, complicating the regulatory landscape further.
