The purpose of the bill, which amends the Credit Institutions Operations Law, is to allow the Central Bank of Cyprus to require legal entities applying for a licence to operate as credit institutions to pay the costs related to the examination of their application.
During the debate, the Central Bank, the Legal Service and the Association of Banks were in favour of the Bill, and it was reported that the European Central Bank's opinion on the Bill had also been sought.
A representative of the Central Bank gave the example that the cost for the examination of an application by credit purchase companies currently amounts to 5.000 and added that the intention is to apply the same to NPL management companies when the legislation under discussion is adopted.
He also said that the CB is also examining what other Eurosystem countries are doing on this issue in similar cases.
In addition, in another matter, the Finance Committee discussed a harmonisation bill on access to the activity of credit institutions and prudential supervision of credit institutions and investment firms.
A central bank representative said that a bank seeking authorisation to operate as a financial institution should have an initial capital of at least €5 million.
However, the representative of the Legal Service referred to a harmonisation gap and explained that the House of Representatives has passed in a Cypriot law this harmonisation provision which is mandatory for the Republic and is required to have it in its legislative code and "by mistake of both the Government and the House" the provision concerning the need for the financial institution to have an initial capital of at least EUR 5 million was deleted.
"So while we were harmonized now we are in a harmonization gap and it must be re-voted at the behest of the EU legislator because at the moment there is a harmonization gap for which the Republic is exposed at any time, if the European Commission deems it appropriate, to infringement proceedings," he stressed.
In addition, the Commission discussed in principle a draft bill regarding the imposition of a guarantee fee on a credit institution that benefited from a deferred tax claim created by tax losses. As mentioned during the debate, the guarantee fee may amount to EUR 6.2 million in the event that a financial institution announces a profit in its financial results for a year. The issue will be re-examined after a number of issues raised by Committee members have been clarified, including what to do with banks that announced losses in the immediately preceding years.
The Finance Committee also discussed in principle a harmonisation bill concerning the control of Liquid Assets entering or leaving the European Union and the exercise of intra-EU controls on Liquid Assets.
The purpose of the Bill is to control liquid assets entering or leaving the European Union, as well as arrangements for the exercise of controls on liquid assets entering or leaving the Republic from/to another
Member State.
It was mentioned that in case of failure to declare accompanied liquid assets, the existing law provides for a penalty of up to EUR 50,000, while the proposed bill punishes this offence with a penalty of up to EUR 100,000 or imprisonment of up to 3 years or both. At the same time, the cash may be seized or confiscated as subject to confiscation.
It was also reported that there were cases where the holders of money did not have to prove the legitimate origin of the money, which in some cases amounted to up to 500,000 euros and came from drug trafficking.
The Finance Committee also discussed the amendment of the Open-ended Collective Investment Schemes Law to allow the Cyprus Securities and Exchange Commission (CySEC) to grant extensions of deadlines in cases where circumstances prevailing in the Republic affect the ability of CySEC supervisors to comply with any of the deadlines set out in the relevant basic legislation.
A representative of the legal department raised the issue as the decision of the CySEC to grant an extension of deadlines is published in the Official Gazette of the Republic.
It is for the Ministry of Finance to decide whether it is of an individual or regulatory nature, he noted.
A representative of the Securities and Exchange Commission suggested that the extension is granted by the issuance of a directive by the Commission. The matter will be discussed again in the Finance Committee.
Source: CNA
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