The business community in Cyprus is grappling with significant challenges following the implementation of the new legislation concerning the Real Beneficiary Registry of companies. Many companies, particularly smaller ones, are on the brink of economic collapse due to penalties imposed for non-compliance by the January 1, 2024, deadline.

Thousands of businesses are facing fines up to €20,000, with additional penalties levied on directors and other executives. This situation has led to widespread unrest in the service sector and prompted the Parliamentary Trade Committee to consider freezing the imposition of fines to allow companies more time to comply.

Various professional associations, including the Cyprus Bar Association, the Cyprus Investment Funds Association, and others, have made representations to the Company Registrar and other state bodies, demanding a resolution to the issues caused by the directive's application.

They are seeking an extension until the end of February for companies that complied with the interim solution by November 13, 2023, to register their real beneficiaries without fines. There is also a call for the automatic imposition of fines to be revoked, and for refunds of fines already collected.

Lawyers argue that the tight deadlines set for registration, along with the system's inadequacies and misinterpretation of EU directives, have led to these unjust penalties. They highlight the system's automated nature, which indiscriminately imposes fines, and the lack of opportunities for companies to correct their compliance status.

The Cyprus Bar Association contends that the private sector is not responsible for the chaos caused by the new system. They stress the need for a clearer and more effective public information campaign to prevent companies from facing economic ruin due to disproportionate fines.