TUESDAY, 31 JAN 2023



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CPM: Celebrating 20 Years of Success

CPM: Celebrating 20 Years of Success

CPM, one of the leading international providers of fiduciary and corporate administration services in Cyprus, celebrates its 20th anniversary this year. CEO Costas Christoforou tells Gold how the company has grown, stresses the importance of compliance and regulation, and suggests that the Panama Papers revelations should never have suggested that Cyprus is a tax haven.

Gold: 20 years ago, Cyproman Services Ltd (CPM) was established, initially to provide trustee services to selected clients. How great a need did you identify at the time and what made you expand the firm’s range of services?

Costas Christoforou: At the very beginning, we were approached by family offices requesting specific restructuring of ownership of their corporate structures, which necessitated the creation of trusts. The momentum for expanding our spectrum of services emanated from client requests. These mainly related to company formation, bank account administration and accounting write-up.


Gold: How has the firm grown over these two decades in terms of employee numbers, offices, etc? 

C.C.: We started in 1996 with five people in Nicosia. By 2005 we were 50 and we opened a branch in Larnaca and now we employ 100 people with offices in Nicosia, Larnaca, Limassol and Paphos.


Gold: How has your clientele and work changed over these 20 years? 

C.C.: In terms of clientele, we started mainly servicing clients investing in Central Europe and then we undertook projects relevant to real estate activities in Eastern Europe. We had also serviced some venture capital companies investing in matured markets in Western Europe, although these were limited in number. In the last 10 years, we have diversified to projects in India, Africa and China. With respect to the type of work, we have expanded considerably by offering more complex services, such as escrow agency, fund administration, consolidation accounting, paymaster agency and AML compliance advice.


Gold: Which of the four service areas in which you now operate as CPM do you focus on most: Fiduciary, Corporate, Fund Administration or Trusts?

C.C.: We focus our attention on all the services we are required to offer.  Marketing-wise, we believe that there is more appetite for fund administration and trust restructuring services. Changes to the tax legislation of developing countries in Central and Eastern Europe, combined with the rigorous compliance rules enacted by the EU, have slowed the demand for Fiduciary and Corporate services. However, as investments still continue to be pursued, the creation of funds has become an efficient mechanism that can accommodate that, hence our increased involvement in administering these funds. Also, the trend showing that trusts continue to be a safe harbour for securing family assets for the benefit of heirs, coupled with the fact that Cyprus is an ideal jurisdiction for forming and administering International trusts, has shifted our attention to a more aggressive marketing of trusts.


Gold: During your 20 year-history, I would suggest that there have been two major events: Cyprus’ joining the EU and the 2013 financial/banking crisis. How did each of these affect the firm?

C.C.: Our industry has long enjoyed the benefits of having a legal system based on the Anglo-Saxon model of Law, as well as upholding accounting international standards and offering a wide range of financial and banking services. Joining the EU in 2004 provided us with the opportunity to bring our legal framework further into line with that of the European Union and to supply an extremely favourable system within Europe, while giving the confidence to businesses outside the EU that they could rely both on our framework system and in the country’s prospect and stability. Our firm was quick to become fully compliant with EU standards, taking advantage of the already established legal system and focusing on diversifying both its services and its markets to fully utilize and develop the EU-member advantage. It is an advantage we enjoyed at a significant degree until 2013, when the banking crisis disrupted both the growth and the economic prospects of the island. Even worse than the capital restrictions that were adopted as part of the economic adjustment programme, the biggest struggle we had to fight involved the loss of confidence in our financial and banking systems and the uncertainty surrounding the economic fate of the country. Despite the impact of the crisis, we have succeeded in maintaining and even developing our client base by communicating to them that we firmly believed that both Cyprus and our firm’s prospects remained unchanged. It took a huge effort by our excellent employees and human capital, the majority of whom are still part of our company, l despite the difficult periods during the crisis.


Gold: How do you view the island’s economic prospects following Cyprus’ exit from the Troika’s economic adjustment programme?

C.C.: As mentioned before, our message to the markets and to our clients was that the potential of the country remained unchanged in spite of the 2013 crisis, the bail-in and the restrictions imposed. Exiting the Troika’s programme should reinforce the confidence of our economic partners and attract further investments to the island, provided that we remain faithful to our strategic intent, both as a country and as an industry, and we continue to promote our services sector as a stronghold of the island’s economy, making sure not to repeat the mistakes of the past.   


Gold: Compliance and regulation are becoming increasingly important in work such as yours. Do you feel that they are necessary or does it affect clients in a negative way?

C.C.: They are absolutely necessary. The fortification of the regulatory system and the improvement of Anti-Money Laundering regulations promote a transparent and reliable international business field. It is fundamental, however, for compliance and regulation to be joined together with sound business practices, acumen, business intelligence and judgment. And when such a combination and balance is achieved, it can never affect clients negatively. Uniformity then needs to be in place, especially when in our industry, while having one regulatory framework, we continue to have three different regulatory bodies enforcing it. It is the difference in the way the legislation is enforced that may impact clients in a negative way, as the degree of compliance differs based on the body each provider is regulated by.    


Gold: With all the negative publicity surrounding tax avoidance, etc., following the publication of the Panama Papers, are you confident that Cyprus can maintain its position as a reputable regional business centre?

C.C.: Absolutely, provided that we, as a country, publicize the right set of circumstances in the right forum. We should have express our gratitude to the ICIJ (the consortium of journalists that investigated and revealed the data on the offshore structures) for the enormous task they had undertaken to reveal potential tax evasion schemes, which, after all, promote inequality in taxing the wealth generated by the world workforce. However, in trying to accomplish this, we think that they should have investigated all the facts in greater depth before revealing them. In this respect, we should have pointed out the erroneous inclusion of Cyprus in the list of ‘tax haven’ jurisdictions used in the graphics illustrating their investigation and stressed the inaccuracy of such information, as Cyprus is not a tax haven and cannot be considered as an offshore jurisdiction. We should also have pointed out to them that Cyprus has been a credible member of the European Union since 2004 and a full eurozone member since 2008, and it has an outstanding reputation for conducting professional services and investment activities. We could have added that, through its EU membership, Cyprus has sealed its acceptability and accessibility in Europe. EU directives are transposed and EU regulations are implemented promptly into national law and the European Commission monitors such enforcement to ensure compliance and harmonized functioning of the single market.


Gold: What else, in your view, should they have taken into consideration before placing Cyprus in the ‘tax haven’ category?

C.C.: We should have pointed out to them that in the reformation of its financial sector legislation, Cyprus has successfully implemented a simplified and transparent tax system and developed as a financial and fund centre to become fully compliant with the international best practices and requirements of the EU, OECD, Financial Action task Force (FATF) and Financial Stability Forum (FSF). Furthermore, Cyprus has taken effective regulatory measures to harmonize and implement a suitable mechanism for the prevention and suppression of money laundering and terrorist financing activities. Part of the regulatory compliance mandate imposed on Cyprus service providers (including, but not limited to, banks, auditors, external accountants, tax advisors and fiduciary company services to third parties) is the customer identification programme under which due diligence checks before doing business with a person/entity are required under applicable laws. We should have indicated to them that, since 2009, Cyprus has been one of the OECD’s 45 “white list” territories as it has implemented the internationally agreed taxation standards and best tax practices, receiving thus a clean bill of health with regard to the reliability and robustness of its financial and regulatory framework. It is not considered to be tax haven by the OECD and is, moreover, fully compliant with the global standard for tax co-operation, transparency and exchange of information. Currently, Cyprus counts around 60 Double Tax Agreements with countries such as USA, United Kingdom and other EU countries.


Gold: And it’s not as if Cyprus hasn’t been in the international spotlight for positive reasons lately.

C.C.: Of course. As we all know –  and this could have been used as a good marketing pitch as well – Cyprus has very recently successfully exited its three-year international bailout programme, one of the most rigorous financial and economic reform programmes overseen by the EU and the International Monetary Fund (IMF). The fiscal, financial and structural reforms as well as the measures for the improvement of corporate governance which took place as part of the aforementioned Programme have led to Cyprus’ landmark transition. Furthermore, Cyprus is a member of the Moneyval Committee of the Council of Europe and an associate member of the Financial Action Task Force (FATF). Cyprus undertook a number of actions in order to comply, among others, with the thirteen recommendations made in Moneyval’s action plan in the context of Cyprus’ request for a bailout in 2013. To this end, frequent inspections are carried out in the industry, reviewing the level of compliance and making recommendations for improvement, where applicable. Adding to this, Cyprus has received positive feedback from Moneyval, which is evidence of its good reputation as an international business centre.


Gold: You’ve had a good first two decades. What are your aspirations for the next 20 years of CPM?

C.C.: To continue developing a culture that values the most important capital we have: our human capital, our people, the associates, partners and clients who made it possible for the company to prosper for the past 20 years. We intend to grow the business, keep diversifying our services and markets and continue striving to be one of the top service providers in the country. 



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