FNG Exclusive… FNG has learned that part of the new EU directive to combat money laundering will result in the unveiling of ownership information for Cyprus based Retail FX brokers.

Cyprus is home to more than 100 licensed Retail FX brokers, many of which do a good job of disguising either the ownership behind the company, or management (or both). However, Cyprus has agreed to launch a new owner registry of the thousands of private companies domiciled on the EU island nation. The new registry, to be called the Ultimate Beneficial Owner (UBO) register, will start formally collecting data next week (officially March 16), giving companies up to six months to provide full disclosure as to who the immediate and ultimate beneficial owners are for each.

The registry should be available for public perusal by the end of the year.

Establishing the registry is a requirement of EU anti-money laundering rules, but it has been somewhat resisted by Cypriot authorities until now. Cyprus is a magnet not just for Retail FX brokers, but also for rich individuals and shell corporations looking to shelter money and holdings, thanks in part to the country’s low (15%) corporate tax rate and lax oversight. Cyprus recently ended a passport-for-cash scheme, meant to provide Cypriot (and thereby EU) citizenship to wealthy individuals from abroad willing to invest in the country, after allegations of corruption in the program.

While many private corporations which were set up for the express purpose of hiding ownership and sheltering assets are likely to depart Cyprus before the registry becomes active and thereby avoid disclosure, FX brokers are based in Cyprus for other reasons – cost of ownership and operation, low taxes, many experienced FX industry executives, EU license passport opportunity – and are unlikely to relocate.

Who owns all the Cyprus FX brokers? Well, we are soon going to find out.