Fiduciary Services - what does it mean and why it is so common in Cyprus? Why so many lawyers are using this phrase?
Fiduciary services are services offered by regulated service providers to companies. Such services include the below and can be provided not only by lawyers but also by any other service providers which are regulated by CySEC, CBA and ICPAC (CySEC stands for Cyprus Securities & Exchange Commission, CBA for Cyprus Bar Association and ICPAC for Institude of Certified Public Accountants in Cyprus)
Services offered by fiduciary service providers:
- Substance services
- Holding of shares on behalf of the real owners
- Acting as directors, company secretary and shareholders of a company
- Providing a physical address to a company
Why such services exist?
Such services used to be very popular in the past as they offered anonymity to the real owners of the Cyprus companies; so called UBOs (Ultimate Beneficial Owners). Following the 2022 UBO Registry EU Directive all UBO must be disclosed in a registered domain which can be accessed by the public if the appropriate enquiry is made.
Fiduciary Duty
The term fiduciary comes from the responsibility of these regulated entities to act in the best interests of their clients. As investopedia puts it “ A fiduciary duty is the obligation a party has to act in another party's best interest.”
Can we Trust the Cyprus Service Providers? Is there sufficient trust in Cyprus?
Yes.
There are no known cases of misuse of clients funds or malpractise (at least made public). This is the reason this concept work as it is all about trusting your service providers.
We believe there is sufficinint trust to Cyprus Service Providers (can be Lawyers, Accountants, Fiduciary Service Providers) as such fiduciary services are regulated; which means only regulated entities can provide them. The owners, compliance officers and management of evey Company acting and performing fiduciary services is validated by the local regulators who require certain high level criteria for the licensing. In 2023, money laundering compliance officers of Fiduciary Service Providers were required to take exams in Cyprus to be able to act in their role and capacity.
About Finhub
Finhub collaborates only with regulated entities and as such with regulated fiduciary companies which are monitored by CySEC, CBA and ICPAC
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