The Cyprus Securities and Exchange Commission (CySEC) earlier today unveiled an amended procedure for those companies who have already obtained registration as Cyprus Investment Firms (CIFs) but have not yet had their licenses activated.
The revised procedure obviously seeks to prevent the fraudulent activities of businesses that seek to avoid detailed checks by the regulator.
Putting it bluntly, a company is not authorized to provide investment services in Cyprus unless it has its CIF license activated by the watchdog. Getting one’s license activated is a complex process and takes time, as well as some effort to have one’s business in compliance with local regulatory requirements. Some companies seek to avoid the activation and instead obtain only registration, boasting on their websites that they are CySEC-regulated.
Today’s document aims to bring an end to such malicious practices. From now on:
The decision to grant authorization will be published on CySEC’s website with the reference (Μη δραστηριοποιημένη / Non activated). As such, no other certificate (hard copy) will be issued thereafter.
This is very useful for investors, as they can check whether they are actually dealing with an authorized firm or one that is just claiming to be authorized (or one that has yet to be authorized in the future).
Furthermore, a firm will not be permitted to provide any type of services, for which it has received authorization, until it has fully complied with the conditions of its activation.
Also, firms are obligated to fully comply with the authorization conditions. Non-compliance within any given timeframe will result to an automatic lapse of existing authorization, without the need for CySEC to act any further or commence any additional procedures.
Even more importantly, before getting their CIF license activated, firms’ offices will be inspected by CySEC. The regulator will be checking details about the office, the staff, as well as client accounts, domains, contracts, etc. Depending on the results from such inspections, CySEC will decide whether to activate or not a given CIF license.
The new rules come into force from today – the date of publication of the announcement.
To view the official document by CySEC, click here.