CYPRUS Law and Practice Contributed by: Marcos Georgiades, Dominique Pelides and Panayiota Elia, Georgiades & Pelides
1. Legal Framework 1.1 Key Laws and Regulations
The regulators responsible for supervising banks in Cyprus are the European Central Bank (ECB) and the CBC. 2. Authorisation 2.1 Licences and Application Process Subject to the requirements outlined in 3.1 Requirements for Acquiring or Increasing Con- trol over a Bank , a bank must obtain a banking licence from the CBC before it commences its activities in Cyprus or its activities abroad from Cyprus. A bank authorised and supervised by the com - petent authorities of another European Econom - ic Area country (an “EEA State”) can carry out the activities listed in Annex IV to the Banking Law in Cyprus (see below) without the need for a licence from the CBC, provided these activi - ties are covered by its licence and that it com - plies with certain notification requirements to the CBC. Such a bank can operate in Cyprus through either the establishment of a branch or the provision of cross-border services. Activities and Services Covered The activities and services covered by a banking licence include, among others: • taking deposits and other repayable funds; • lending; • financial leasing; • payment services; and • trading for own account or for customers in money market instruments, financial futures and options, among others. Subject to certain exceptions, the Banking Law prohibits banks from carrying out any commer - cial activity that is not one of the activities set out
The main legislation governing the banking sec - tor in Cyprus is the Business of Credit Institutions Law of 1997, Law No 66(I)/1997 (as amended) (the “Banking Law”). The Banking Law deals with the licensing, ownership and membership of banks as well as their winding up, among other matters. A number of directives have been issued by the Central Bank of Cyprus (CBC) pursuant to the provisions of the Banking Law, including the Assessment of the Fitness of the Members of the Management Body and Key Function Holders of Authorised Credit Institutions Directives of 2020 and 2022 (the “Fitness Directive”) and the Inter - nal Governance of Credit Institutions Directives of 2021 and 2023 (the “Governance Directives”). There are also various EU regulations relevant to the banking sector that have direct effect in Cyprus, including Regulation (EU) 575/2013 of the European Parliament and of the Coun - cil of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (as amended) (CRR), and Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (“Regulation 1024/2013”). The provision of payment services and electron - ic money services is regulated separately by the Law on the Provision and Use of Payment Ser - vices and Access to Payment Systems, Law No 31(I)/2018 (as amended) and the Law on Elec - tronic Money, Law No 81(I)/2012 (as amended).
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