Cyprus Investment Firms (‘CIFs’) may not provide investment services or perform investment activities in third country jurisdictions without first seeking the necessary prior authorisation by the Cyprus Securities and Exchange Commission.
In some instances Third Country Competent Authorities have taken measures against the CIFs involved ranging from the issuance of an investor warning to taking formal legal action against the relevant CIF in order to cease the unauthorized activity in their territory. It should be noted that the obligation to comply with the Third Country legal framework exists irrespective of the country of registration of the firm providing such service.
The provision of investment services and performance of activities in third countries is regulated by the laws and regulations that apply in those countries. The Commission consents to the provision of investment services and activities by a CIF, if it complies with the provisions of Section 79 of the Investment Services and Activities and Regulated Markets Law of 2007 (the ’Law’) which transposes MiFID. The Commission always communicates to the CIF the fact that it is the responsibility of the CIF to be informed about the relevant legal provisions of the third country to the residents of which the CIF intends to provide services. It is therefore important that the CIFs comply with their legal obligations (in cases where activity is performed/service is provided to persons resident in the territory of a third country, either through local presence, or on a cross border basis that would be considered by the Competent Authority of that country as a regulated activity) pursuant to the Law as well as the legal framework of the Third Country jurisdictions in which they are active.
The Commission may request from a CIF ‘to inform the Commission about the third countries, where they actually provide/perform services/activities and submit evidence of the authorisation obtained to do so or of any other document evidencing that they legally provide/perform services/activities within the territories of those third countries’. Such evidence may include any authorizations obtained from the Third Country Competent Authorities, any legal advice obtained regarding the provision of the specific services in the relevant third country jurisdiction or any correspondence that confirms that the CIF legally provides its services or performs activities within the territory of a third country etc.
It would be to the best interest of the CIFs to refrain from providing any unauthorized activity in third country jurisdictions until they obtain authorisation and/or legal advice that authorisation is not required, in order to be in compliance at all times.
In case you require such advice and/or require such authorisation, please contact us at firstname.lastname@example.org.