Cyprus Investment Firm License (CIF)

The Cyprus Investment Firms Law 87(I)/2017 provides the legal framework for the provision of investment services and activities.

 The basic requirements for a CIF License are as follows:

• Be incorporated in Cyprus.
• Four (4) directors; two directors acting as executives and two non-executives; at least three (3) of them must be Cyprus residents; Directors must demonstrate knowledge and experience and must pass the “fit and proper” test of the CySEC.
• Local resident staff members shall be hired on a full-time basis to fulfil the key functions of the Company. Depending on the license selected, a minimum number of personnel must be hired.
• The Company must have a fully operational office in Cyprus.

Differences do exist as to the capital requirements between a CASP and a CIF license.  The CIF, like the CASP, also requires a minimum regulatory capital to be authorised to operate. This capital must be available at the beginning of the process and kept throughout the licensed activity.

The Capital Requirements for a CIF License are:

• €75,000 for Reception & Transmission, Execution of orders on behalf of clients, Portfolio management, Investment advice without being authorised for holding clients’ funds.
• €150,000 STP License (Reception & Transmission, Execution of orders on behalf of clients, Portfolio management, Investment advice).
• €750,000 Market Maker License (Reception & Transmission, Execution of orders on behalf of clients, Portfolio management, Investment advice, Underwriting and placing of financial instruments on a firm commitment basis, Dealing on Own Account, Operation of Multilateral Trading Facility).

For the preparation of an application to CySEC for a CIF license, the below are needed:

• A business plan.
• Internal operation manual, which will include the Anti-Money Laundering Procedures.
• Defined policies and procedures that ensure compliance with all its legal obligations.
• Independent compliance unit staffed with eligible persons.
• The organisation and administration of a CIF must be designed in such a way that it prevents conflicts of interest.
• A clear risk policy that must be implemented and controlled by a separate risk management unit.
• A CIF is required to join the Investment Compensation Fund for Clients and comply with its obligations.

Any other employees who will provide investment services and act as the Compliance Officers of the CIF must:

• Have the necessary knowledge and expertise for performing their assigned responsibilities.
• Be registered in the public register maintained by CySEC.

CySEC’s application charges:

• €7000 with the submission of the CIF’s application.
• €3500 with the submission of an application for the license extension. Depending on the license type and the license extension, charges may vary.

CySEC’s annual fees (euro):

1. a) A fixed charge from €5000 to €10,000 depending on which services are provided
2. b) A charge depending on the turnover, provided that the turnover exceeds €500.000, as below:

• 0.75% – between €500,001 – €1,000,000
• 0.1875% – between €1,000,001 – €5,000,000
• 0.1125% – between €5,000,001 – €10,000,000
• 0.0975% – if exceeding €10,000,001.

The above is calculated based on the annual audited financial statements.

FINWYN CONSULTANCY LTD legal fees for preparing and submitting an application to CySEC for a CIF license range from €35,000 to €50,000 depending on the nature of the application.   Please note that the fee excludes CySEC’s application fees and capital requirements.

In Cyprus, it is possible to obtain an investment license. The applicant company must meet a number of requirements for the bottom-line company. First, the management of the CIF (Cyprus Investment Firm) should be composed of at least two persons with impeccable reputation and experience to ensure the reliability and efficiency of CIF management. Moreover, a company must employ employees with impeccable credentials who possess the necessary skills, knowledge and are able to perform their duties: in particular, the position of Head of Portfolio Management,  Head of Investment Consulting, The head of the Commitment Department, the head of the Acceptance and Execution Department and the head of the Risk Management Department must be registered in the CySEC state register and must pass the state examinations, which are held 1–2 times a year.

Licensing

1. Establish, implement and maintain decision-making procedures and an organizational structure that clearly and documented the chain of command and assigns roles and responsibilities. Further, Establish, implement and maintain the required internal audit mechanisms to ensure compliance with decisions and procedures at all levels of the CIF.
2. Develop, implement and maintain risk management policies and procedures that identify risks to CIF activities, processes and systems and, where appropriate, identify risks to divisions, where appropriate, develop an office-by-office risk matrix.
3. Implementation and maintenance of effective organizational and administrative measures to ensure that all reasonable measures are taken to prevent conflicts of interest affecting clients.
4. Take reasonable measures to ensure the continuity and regularity of investments and additional services and activities, applying appropriate proportional systems, resources and procedures.
5. Apply appropriate customer identification procedures, documentation and internal reporting
6. Establish and maintain a permanent, effective compliance function (subject to legislative issues) that operates independently. An internal control officer must be appointed and must report to the CIF at least once a year.
7. Establishment, implementation and maintenance of accounting policies and procedures to enable timely submission of CySEC financial statements to the CySEC commission.

The FINWYN CONSULTANCY LTD team of experts will be pleased to accompany your project in the necessary procedures for preparing documents and obtaining an investment license in Cyprus. Individual approach to each client is important for us, and we are ready to take care of the needs of your business.