Further to the changes in the CIP (Cyprus Investment Programme) announced on 22 August 2019, it is important to clarify the definition of a Politically Exposed Person (PEP) in the context of a CIP application. This is critical since the new CIP rules now make clear that PEP (those holding office anytime in the past 5 years) are not eligible to apply for citizenship by way of investment.
The applicable definition can be found in section 2 of the Prevention and Suppression of Money Laundering and Terrorist Financing Laws of 2007 to 2019 (the “Law”) which is based on the EU directive which applies to all Member States.
Below is the definition of a PEP (quoted from the Law):
“Politically exposed person” means a natural person who is or who has been entrusted with prominent public functions in the Republic of Cyprus or in another country, an immediate close relative of such person as well as a person known to be a close associate of such person:
Provided that, for the purpose of the present definition, “prominent public function” means any of the following public functions:
(a) heads of State, heads of government, ministers and deputy or assistant ministers;
(b) members of parliament or of similar legislative bodies;
(c) members of the governing bodies of political parties;
(d) members of supreme courts, of constitutional courts or of other high-level judicial bodies, the decisions of which are not subject to further appeal, except in exceptional circumstances;
(e) members of courts of auditors or of the boards of central banks;
(f) ambassadors, chargés d'affaires and high-ranking officers in the armed forces;
(g) members of the administrative, management or supervisory bodies of State-owned enterprises;
(h) directors, deputy directors and members of the board or equivalent function of an international organisation;
Provided further that no public function referred to in points (a) to (i) shall be understood as covering middle-ranking or more junior officials;
Provided furthermore that “close relatives of a politically exposed person” include the following:
(a) the spouse, or a person considered to be equivalent to a spouse, of a politically exposed person;
(b) the children and their spouses, or persons considered to be equivalent to a spouse, of a politically exposed person;
(c) the parents of a politically exposed person.
Provided even furthermore that “persons known to be close associates of a politically exposed person” mean a natural person:
(a) who is known to have joint beneficial ownership of legal entities or legal arrangements, or any other close business relations, with a politically exposed person;
(b) who has sole beneficial ownership of a legal entity or legal arrangement which is known to have been set up for the de facto benefit of a politically exposed person.