TaxLegi 31.12.2022

On 22 November 2022, the European Bank Authority published guidelines on the use of remote customer onboarding solutions (“EBA Guidelines”) when performing customer due diligence (“CDD”) procedures whilst complying with the anti-money laundering and countering the financing of terrorism (“AML & CFT”) rules under EU Directive 2015/849.

The EBA Guidelines were issued in an effort to address the increasing demand of FinTech companies to onboard clients remotely through the use of technology tools. The pressing need for onboarding via means other than the production of certified documentation in original or copy form that has been historically used, arose dramatically after the COVID-19 outbreak, when companies and customers were not able to have face-to-face meetings nor Know-Your-Client (“KYC”) documentation in forms permissible up to that point.

The purpose of the EBA Guidelines is to illustrate the safeguards that credit and financial institutions should adopt when performing remote onboarding processes to ensure the robustness of the KYC documentation received and that AML/CFT obligations are not compromised.

The key considerations for institutions intending to make use of remote onboarding solutions are the following:

1.    Before adopting a new remote onboarding solution, institutions must carry out a pre-implementation assessment to check, among others, the appropriateness of the solution, and identify how the risks that such solution entails can be mitigated.

2.    Internal policies should be set in place, outlining

• How the pre-implementation assessment of the new remote onboarding solution will be conducted,
• Remedial measures that will be followed in case a risk has materialised or where errors have been identified and how the remote solution's adequacy and reliability will be monitored on an ongoing basis.
• The types of data, documentation and other information institutions will use to identify and verify the identity of a customer.

3.    Data collected via the new remote onboarding solution should be up-to-date, in a readable format and of sufficient quality, time-stamped and stored securely to enable future revisits for verification purposes.

4.    The EBA Guidelines provide instructions on how different types of data should be assessed, without prescribing the type of data which must be collected or the method of collection.

The EBA’s technologically-neutral approach affords institutions the flexibility to customise the remote onboarding solution in a manner that suits their model of operations, as long as its pre-implementation assessment is positive.  

Institutions using or intending to use third-party providers for their CDD should ensure their outsourcing arrangements include a duty on service providers to effectively implement and comply with the institution’s remote customer onboarding policies.  

Our Financial Services, Funds and Capital Markets team can support clients with the implementation of remote customer onboarding procedures in line with the new guidelines, including but not limited to, the revision of existing AML manuals and policies and the drafting of outsourcing agreements with third party vendors offering remote onboarding solutions.

For the full EBA Guidelines document, click here.

• Andria Koukounis
• Polyvios Nikolaou
• Agamemnon Polydorou

31^st of December 2022 is the last date for: 

Submission of a revised Temporary Tax return for the year 2022: 

Upwards revision of the Temporary Tax return for the year 2022:

• In case the Taxpayer will proceed with the upward revision of the initial Temporary Tax submitted for the year 2022, such revision can be created through the Tax Portal (i.e. no requirement for the submission of the TD6 form) by the 31^st of December 2022.
• It is noted that any excess amount (difference) between the initial and the revised 1^st  instalment can be paid either through Internet Banking to the Tax Authorities or via wire transfer before the 31^st of December 2022 in order to avoid the imposition of additional interest and penalties for the month of December 2022.
• Upon revision, the deadline for the payment of the revised upward 2^nd instalment is by 31^st of December 2022 and can be paid either through Internet Banking or wire transfer. However, if the payment will be made before the 31^st of January 2023, no interest and penalties will be imposed.

Downwards revision of the Temporary Tax return for the year 2022:

• In case the Taxpayer will proceed with the downward revision of the initial Temporary Tax submitted for the year 2022, such revision can be made only through the submission of a revised Provisional Tax return, (Form TD.5 for natural persons and Form TD.6 for legal persons), to the Tax Authorities various District Tax Offices via email, depending on the taxpayer's District Tax Office by the 31^st of December 2022.
• Once the revised provisional form is processed by the Tax Authorities, the deadline for the payment of the payment of the 2^nd instalment is by 31^st December 2022 and can be made via through Internet Banking or via wire transfer. However, if the payment will be made before the 31^st of January 2023, no interest and penalties will be impose.

Temporary Tax return for the year 2022 for the companies incorporated during 2022: 

• Please refer to the attached Tax Alert previously issued during October by EY for the same matter for your reference.

No revision of the Temporary Tax return for the year 2022: 

• The payment of the 2^nd instalment of the 2022 Provisional tax can be made via through Internet Banking or via wire transfer by the 31^st of January 2023.

SDC and GHS for the 2^nd semester of 2022:

• Payment of the Special Defence contribution ("SDC") and General Healthcare System contributions ("GHS") for the 2^nd semester of 2022 on rental income which has not been withheld by the tenant, on overseas bank interest income and on any dividend income which may be subject to SDC and GHS shall need to be made no later than the 31^st of December 2022.

Special Contribution for Defence for the distributable profits of the year 2020 for deemed distribution purposes:

• The payment of SDC for the distributable profits of the year 2020 for deemed distribution purposes shall need to be made by the 31^st of January 2023.

Note: Deemed distribution does not apply in respect to profits that are directly or indirectly attributable to shareholders that are non-resident in Cyprus or in the case of Individual shareholders not considered to be tax resident and domiciled in Cyprus.