Insurance Industry (Insurance Companies, Brokerages, Agencies)
- Investment Companies
- Forex Companies
- Cyprus Banks
- Crypto Licenses
Licensing your company with the local regulators fast and efficiently. Licensing of a Cyprus Investment Company, a Cyprus Fund, a Crypto License or a Company that offers insurance products and services has never been easier. Our team has long experience with CySEC, Central Bank and the Cyprus Registrar of Insurers making the entire process smooth and effortless from your end.
Even though each license type varies typically licenses have common steps but in different orders. We list below what the regulator examines. For each specific license type refer to the corresponding section of our website.
UBOs Source of Wealth
UBO in licensing, accounting and legal terms is the Ultimate Beneficial Owner and is the final owner of the structure or the company. Not the paper owner but rather the real owner the key person or persons who exercise control and influence over a single company or a group of companies.
The regulators always want to know more about the UBO of the entity which will be licensed. CySEC and the Central Bank of Cyprus will go as far as interviewing the actual person who is behind a bank (the banks UBO), the person behind the Investment Company or the Cyprus Fund. Other regulators such as the Cyprus Registrar of Insurers may not interview the UBO but will off course like the rest of the regulators collect all information and documentation about them including, offcourse, how they collected the funds for the investment.
So what does source of funds really mean?
Source of funds literally means in simple terms, how did you - the investor / UBO collected the money to make this investment. How did you accumulate the capital requirement to set up a bank, a fund, an insurance company.
If you are applying for a banking license where at the time of writing of this article the capital requirement is 5 million you will have to demonstrate how you were able to accumulate this funds. From your businesses, from your salary, maybe it was inherited? The evidence will have to be gathered authenticated and presented to the regulator. If it is weak or non commercially sensible then your application will be rejected.
We can not stress enough the importance of sourcing your application to the professional fully regulated firm like ours since applications are approved after a considerable amount of time and if rejected then the entire licensing operation will stall for a year on average.
Reasons for rejection
Each application requires a different timeframe to be prepared by the service provider and to be examined by the Cyprus regulator. A rule o thumb is the below:
-> Cyprus Banks - 6 months
-> Cyprus Funds - 6 months
-> Cyprus Crypto license 6 months
-> Cyprus Insurance Companies - 4- 6 months
-> Cyprus Insurance Brokerages / Agents - 1 month
Another rule of thumb is the following; the higher the capital introduced for the license the higher the fees of the service provider, the more difficult the licensing application pack and off-course the longer it takes to be approved.
Rejected applications & re- applying
Rejected applications can be re-applied using the same application pack with the additional information required to be successful based on the rejection reasons given by the regulator but depending on the license type the timeframe for a successful application can vary tremendously and could cause tens of thousands of overhead costs to the applicant as explained below:
Re- Applying for a Cyprus Fund / Investment Company
The initial application takes 6 months to be examined and if rejected then the Company will have to re-apply. The Cyprus Securities and Exchange Commission being extremely busy with industry demands, changes and hundreds of other applications will not prioritise the application. It is prudent and realistic for the applicant to expect that the re application will take fairly the same time to be examined like the first application. This is contrary to smaller licensing requirements like applying for an Insurance Company license, an Insurance Brokerage / Agency where the local registrar of Insurers is less busy hence faster.
What does it mean for the applicant
It literally means tons of money been wasted on maintaining the existing set up of the fund / the investment firm, paying for payroll costs, paying for the necessary infrastructure (including platforms and premises) in order for the entity set up to much the application resubmitted.
A common scenario we witness is the rejection of applications to CySEC usually for investment companies due to insufficient evidence of source of funds of the UBO which costs the company at least 16 months in operational and infrastructure costs; 2/3 months for the service provider to gather and prepare the application, another 6 months for the application to be examined, if not successful another 1/2 months to gather the additional information and lastly another 6 months by CySEC to re-examine the case.
How to avoid rejections
The number one reason to avoid rejections is by outsourcing the application to a reputable regulated firm who knows how the system works and most importantly what causes an application to be rejected.
The number one reason for rejections by the local regulators is no other but insufficient evidence and information provided on behalf of the UBO, primarily source of funds.
- related party loans
- Luck of audited financial results
- Luck of inheritance motorised information
- Unrealistic income sources
Are the most common factors rendering the applications void.
Want to know more details? Send us an email at firstname.lastname@example.org and we will be more than happy to share with you our knowledge and past experiences.