21 Nov Interview with Chris Koutouroushis, President of the Cyprus Fiduciary Association (CYFA)
BF: CYFA serves as the authoritative voice for regulated Administrative Service Providers in Cyprus. Since 2011, the association’s unwavering commitment has earned it a distinguished reputation among public authorities, regulatory bodies, and the wider business community in Cyprus and beyond. To start, please tell us a little bit more about CYFA, the kind of services and expertize you provide to the market and your strategic vision and goals?
Chris Koutouroussis: CYFA was created through the private initiative of fiduciary firms a few months prior to the enactment of the 2012 Administrative Service Providers Law. We aim to provide a platform for administrative service providers to voice their positions and to bring together firms and raise industry standards. The infrastructure base on which Cyprus built its reputation as an international hub for businesses was already in place. Cyprus combines a broad network of double tax treaties with almost 70 countries, a stable tax system, in addition to a good legal framework and a solid banking environment. The association is not the regulator itself, but we are proud to boast members from all three different regulatory bodies – The Cyprus Securities and Exchange Commission, The Institute of Certified Public Accountants of Cyprus and The Cyprus Bar Association. Our goal is to create value for our members through the partnerships and cooperation we have with various stakeholders, as well as the government and to promote best practices through an ambitious educational plan.
BF: According to the World Bank, Cyprus is ranked 54th among 190 economies in the ease of doing business index. The country has recently established itself as a global business hub, offering an ideal environment for corporate headquarters and foreign investments. With extensive experience in banking and corporate services, what are the key strengths that underpin Cyprus’ potential and appeal as an international business and investment hub?
Chris Koutouroussis: Whether you are a conglomerate, an internationally based business or an entrepreneur, the first thing you consider is your bottom-line profit and how to minimize costs, thereby increasing profitability. Keeping in mind that Cyprus is a jurisdiction that has a very international orientation, the fact that it offers significant tax benefits compared to other countries makes it an attractive proposition. However, the advantages are significantly greater than this. Firstly, the taxation system is stable, thereby allowing companies to plan for at least the medium-term. Secondly, being a former British colony, the legal system is based on the principles of English Common Law. Since 2004 and the accession to the EU, European law has had supremacy over national legislation. Thirdly, Cyprus banks always maintained an understanding of international business; making it very easy for investors to transact. Last, but not least, Cyprus maintains a workforce of highly trained and qualified professionals. All these factors have been the foundations around which Cyprus operates as an international business center.
BF: Over the past decade, Cyprus has been affected by numerous international tax, legal and banking changes promoting transparency and information exchange. How would you summarize the main milestones and achievements made in this regard, and how have these global changes influenced the fiduciary industry in Cyprus?
Chris Koutouroussis: Cyprus has made huge strides towards greater transparency and anti-money laundering over the past decade. There was no other option to maintain its reputation and its competitiveness. However, it was not just the global changes that affected the fiduciary industry in Cyprus, but also significant domestic challenges that increased the level of complexity and difficulty in adopting the international changes. The main reason for the success is the highly qualified workforce, since it enables Cyprus to be quick in implementing change. Recently, the Russian-Ukrainian crisis was a significant external shock to Cyprus given that they are both traditional markets for our international business industry. Specifically for the Russian market, Cyprus was quick to adopt EU sanctions and, in some instances, took further steps to ensure compliance and transparency. However, we should not be looking at this from a short-term perspective. The challenge is to make sure that the path that we have chosen – and that we are currently following through our decision-making process – will enable Cyprus to remain on the global map as an international player and to build a long-term and sustainable international business center for years to come.
BF: With expectations of more external shocks ahead, what strategies or measures is CYFA considering to ensure that Cyprus remains an attractive destination for international businesses?
Chris Koutouroussis: CYFA is constantly trying to inform its members about how the future is likely to be shaped. At present, economic sanctions will probably be part of our daily routine, regardless of which country and individuals are targeted. As a result, the takeaway is to maintain a framework in which the implementation of sanctions is efficient and seamless. Remaining compliant and cooperating with the rest of the states that we consider at par in terms of their regulatory framework is the key to maintaining a solid reputation. Perhaps recent events are the springboard for seeking new opportunities and expanding our horizons to build new relations. Success may ultimately depend on adopting a forward-looking approach and that we remain focused on onboarding the clients that are going to be there for the next decade, not the next few months.
BF: In May 2023, CYFA held a meeting with the Ministry of Finance to discuss the latest industry developments and current matters affecting Cyprus’ fiduciary sector. Can you share some insights into the key developments and challenges currently confronting the Cypriot fiduciary sector and their potential impacts?
Chris Koutouroussis: One of the main topics discussed during that meeting is there are three different regulators in Cyprus for the fiduciary industry. That is one of the challenges that has always confronted the sector and the association. Following our meeting, we were pleased to learn the government will take steps, albeit not immediately, to address the issue and create a minimum standard and uniform regulation across the three regulators. This will ensure that our service offering and the compliance status are at the same level across the industry and a step in the right direction towards eventually creating a common regulatory authority.
BF: CYFA has been promoting and underscoring the importance of digitalization and innovative technology in advancing modern banking practices to optimize operations across the entire industry. Could you provide some examples of how digitalization and new technologies can positively impact the fiduciary industry and how banking institutions can be encouraged to adopt digital processes and solutions to streamline operations?
Chris Koutouroussis: Everyone in the services industry agrees that digitalization is a one-way street. Against an already turbulent backdrop after the pandemic, digitalization and innovative technology have proven to be the only tools to move forward. Practices from the past no longer apply because everything has turned digital. The whole industry and everyone affected by the digitalization era must adapt to the demands of this new, testing environment. We, as service providers, banks and the government need to recognize, decide, amend and provide the appropriate training and implementation to catch up with what the global market calls for. If need be, legislative changes must be made.
BF: Cyprus has been seeking to strengthen its economic ties with the US in recent years. What is CYFA’s role in promoting and facilitating business relationships between firms in the two countries? How will you attract new American business interests?
Chris Koutouroussis: It is important to clarify that as an association, we are here to promote the best interests of our firms. Business development is not part of our scope of undertakings. Each member firm conducts its own business development activities. Having said that, CYFA has always been part of the government’s efforts to promote Cyprus as an international business center. We are eager to participate in international forums and attend official visits. In terms of the US, we are confident recent cooperation between Cyprus and the US will strengthen. We feel it’s time for us to go a step beyond our mandatory obligations from being an EU member state and align ourselves further with the US and the UK.
BF: What role do you envisage for CYFA in terms of shaping the future of Cyprus’s economy and regional fiduciary industry?
Chris Koutouroussis: Even though CYFA only has a decade under its sleeve as an association, our input is of value in Cyprus. We have built excellent communication lines with the government and semi-governmental institutions, as well as regulators and other associations, and established ourselves as one of the stakeholders in the industry. Moving forward, the association will grow and strengthen its presence, but most importantly be able to contribute to the efforts towards improving the reputation of Cyprus as an international business hub, which is where the main focus lies.
BF: What is your final message to readers of USA Today?
Chris Koutouroussis: Cyprus is on the right track. It’s a very attractive base from which to do business and US-based businesspeople should explore it as a possible destination. I reiterate CYFA’s commitment to remaining a strategic partner in the drive towards transparency and compliance. This will ensure that as an international business center, we remain reliable and reputable.