Cyprus’s Audit Profession Supervisory Authority (CyPASA) made serious allegations during a parliamentary debate, claiming local lawyers and accountants are establishing companies affected by sanctions in Dubai.
The claims emerged during discussions on proposed legislation to create a National Sanctions Implementation Unit and strengthen enforcement measures for restrictive sanctions.
A CyPASA representative told the Parliamentary Finance Committee that after recent sanctions impositions, some Cyprus-based professionals have been setting up affected companies in third countries, specifically Dubai.
Pantelis Christofides from the Cyprus Bar Association responded by calling on the authority to provide specific evidence regarding lawyers registering sanctioned companies in the United Arab Emirates so they could investigate.
The Bar Association strongly objected to certain provisions in the proposed legislation. Christofides cited concerns about what he described as unconstitutional elements, including requirements for applications to be submitted in English rather than in an official language of the Republic.
He also argued the bills undermine Parliament’s role by allowing the Council of Ministers to make decisions on sanctions, and complained about “ineffective and untimely consultation” on the legislation.
Two of the three bills must be incorporated into Cyprus law by May 20 to comply with EU harmonisation requirements, but this now appears unlikely as the Finance Ministry plans further consultations with stakeholders.
A Law Office representative expressed surprise at what she called the Bar Association’s “aggressive stance” against the Unit, adding: “I’m surprised the Bar Association has a problem with the English language, which we use to facilitate service providers.”
A Finance Ministry spokesperson noted the ministry had responded to lawyers’ correspondence and that some of the lawyers’ comments were being raised for the first time. She expressed willingness to make changes to clarify the legislation.
Other affected stakeholders raised less extensive objections during the committee meeting.
Dubai’s company registration system
Dubai’s company registration system has historically been characterised by a degree of opacity, particularly within its numerous free zones.
Dubai hosts over 40 free zones, each governed by its own regulatory authority. These zones offer benefits like 100% foreign ownership and tax exemptions. However, some free zones, such as the Jebel Ali Free Zone Authority (JAFZA), have been noted for their lack of transparency. Companies registered in these zones are not always required to publicly disclose the identities of their directors, officers, or shareholders, leading to concerns about the potential for illicit activities such as money laundering and tax evasion.
The Dubai-registered company 17 Black Limited became a focal point in the investigation into the 2017 assassination of Maltese journalist Daphne Caruana Galizia.
Caruana Galizia had reported on 17 Black, alleging it was linked to Maltese government officials, including then-Energy Minister Konrad Mizzi and Prime Minister Joseph Muscat’s Chief of Staff, Keith Schembri. She suggested that 17 Black was intended to channel payments to these officials’ Panama-based companies. The owner of 17 Black, Yorgen Fenech, was later arrested and charged in connection with her murder.
The use of Dubai’s company registration system, criticised for its opacity, allowed for the concealment of beneficial ownership and facilitated the alleged corruption Caruana Galizia was investigating. Her assassination has been linked to her exposure of these offshore financial structures.
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