on 23 february 2026, esma clarified the application of mifid ii remuneration rules to tied agents under article 27 of regulation (eu) 2017/565. key points include: balance between fixed and variable remuneration: tied agents are classified as "relevant persons" under article 2(1) of delegated regulation 2017/565. consequently, firms must ensure a balance between fixed and variable remuneration. however, recital 41 allows flexibility, permitting a larger variable component for tied agents, provided it aligns with national laws and does not compromise client interests. national exemptions under article 3 of mifid ii: member states adopting the optional exemption under article 3 must impose analogous requirements, including remuneration rules, to ensure compliance with article 27 of regulation (eu) 2017/565. this guidance emphasises the need for firms to consider tied agents' unique status and national specificities while maintaining policies that prioritize client interests. esma’s response can be found here

on 22 december 2025, the european banking authority (eba) issued updated guidelines amending the existing framework (eba/gl/2022/04) on the equivalence of confidentiality regimes. these amendments aim to ensure that third-country confidentiality and professional secrecy frameworks align with eu standards, which is a prerequisite for sharing confidential information with third-country authorities. key highlights: scope expansion: the eba has expanded the scope of its equivalence guidelines to create a more consistent framework for how eu national regulators cooperate with supervisory authorities in non-eu countries, the guidelines now incorporate confidentiality and professional secrecy provisions under regulation (eu) 2023/1114 (micar), which governs markets in crypto-assets. this includes updated definitions and scope for competent authorities engaging with third-country authorities. equivalence assessments: the eba has evaluated and confirmed the equivalence of confidentiality regimes for several third-country authorities, including: australia: australian transaction reports and analysis centre (austrac) china: national financial regulatory administration (nfra) montenegro: central bank of montenegro peru: superintendency of bank, insurance, and pension fund administrators (sbs) serbia: national bank of serbia united kingdom: financial conduct authority (fca) and prudential regulation authority (pra) legal framework updates: the guidelines reflect changes in third-country legal frameworks and align with micar requirements. they also clarify that these assessments do not address the need for cooperation arrangements or participation in supervisory colleges. the guidelines will be translated into all official eu languages and published on the eba website. competent authorities must report compliance within two months of publication, with the guidelines becoming effective shortly thereafter. the press release can be found here and the final report here

on 21 january 2026, the cyprus securities and exchange commission (cysec) issued a press release highlighting its strengthened financial market oversight in 2025 and its strategic priorities for 2026, focussing on investor protection, transparency, and financial sector resilience, as cyprus assumes the eu presidency. key achievements include: eu presidency role: active participation in european legislative initiatives, including the market infrastructure package and sustainable finance disclosure regulation (sfdr), ahead of cyprus’ eu presidency in 2026. cysec will also host the esma management board and board of supervisors meetings in april 2026. supervisory actions: conducted 600 inspections, imposed eur 2.3 million in fines, and addressed compliance issues in over 170 cases. efforts targeted professional conduct, sustainability risks, and anti-money laundering (aml) measures. even more, cysec actively participates in the preparation of the new european aml authority (amla) and in implementing the new national sanctions framework through the national sanctions implementation unit (nsiu). development and digital transformation:47 new licenses were granted in 2025. assets under management in collective investment schemes rose to eur 11.4 billion, with a substantial share directed to the cypriot economy. investments in it systems, ai, and cybersecurity, alongside plans to enhance human resources are being prepared in 2026. investor protection: issued warnings against unauthorised entities and promoted financial literacy through educational campaigns to encourage safe participation in the digital financial landscape. the press release can be found here

on 9 february 2026, the cayman islands government published three legislative instruments: the mutual funds (amendment) bill, private funds (amendment) bill, and virtual asset (service providers) (amendment) bill. these were created to answer a number of pressing questions arising from tokenised investment funds and to establish a clear and reliable regulatory framework for tokenised investment funds. ‘tokenisation’ means using blockchain or similar technology to digitally represent an investor's equity or interest in a fund, usually while maintaining a traditional position with respect to legal ownership and rights. the new framework created by the three proposed instruments aims to provide clear and unambiguous guidance and address previous uncertainties as to whether funds that are tokenised are still regulated under existing fund laws, such as the mutual funds act and private funds act, or whether they should be treated as regulated under the virtual asset (service providers) (vasp) act due to the tokenisation of interests in the funds. key updates include: definitions for digital equity and investment tokens. enhanced recordkeeping and transferability provisions. disclosure of technology-specific risks. expanded supervisory powers for the cayman islands monetary authority (cima). the virtual asset (service providers) (vasp) act has also been clarified to exclude regulated tokenised funds from being classified as virtual asset issuers, unless they provide virtual asset services like exchange or custody. these amendments reinforce the cayman islands' position as a leader in financial services innovation, ensuring technological advancements occur within a transparent and internationally credible regulatory environment. the official press release can be found here mutual funds (amendment) bill, 2026 can be accessed here the private funds (amendment) bill, 2026 can be accessed here the virtual asset (service providers) (amendment) bill, 2026 can be accessed here

on 15 december 2025, cyprus and vietnam signed a double tax treaty aimed at avoiding double taxation and preventing fiscal evasion concerning taxes on income (cyprus-vietnam dtt). the cyprus-vietnam dtt, aligns with international tax standards, including the organisation for economic co-operation and development (oecd) and united nations model conventions (un model). we provide below key articles included in the cyprus-vietnam dtt: key provisions permanent establishment (pe) key provisions on pe include: construction projects lasting at least 6 months. furnishing of services for at least 6 months within a 12-month period. exploration/exploitation of natural resources (no time threshold). dividends, interest, royalties key provisions on dividends, interest and royalties include: dividends - maximum 5 per cent tax if the beneficial owner (bo) is a company holding at least 70 per cent of the paying company’s capital or has invested at least usd 10 million. otherwise, capped at 10 per cent tax. interest - maximum 10 per cent tax on the gross amount of interest. royalties - maximum 10 per cent tax on gross amount of royalties. capital gains tax (cgt) key provisions on cgt include: the country of origin retains the right to tax gains from shares in property-rich companies. gains from shares representing over 15 per cent of a company’s capital may also be taxed by the country of origin. methods of eliminating double taxation the cyprus-vietnam dtt sets out specific provisions regarding the methods applied by each contracting state to eliminate double taxation. benefits for businesses and investors the cyprus-vietnam dtt provides clarity and stability in the tax treatment of transactions between the two countries, ensuring fair treatment while preventing tax evasion and double taxation. by safeguarding transparent tax practices, the cyprus-vietnam dtt enhances investor confidence and supports the development of stronger trade and economic ties between cyprus and vietnam. the official press release regarding the cyprus – vietnam dtt can be found here the cyprus-vietnam dtt (available in greek, vietnamese and english) can be found here

effective date: 1 january 2026 this guide outlines the critical amendments to the cayman islands’ common reporting standard (crs) regulations, introduced by the tax information authority (international tax compliance) (common reporting standard) (amendment) regulations, 2025, here. these changes represent a significant shift in the compliance landscape, aligning the jurisdiction with global oecd standards and the new crypto-asset reporting framework (carf). as these amendments are directly relevant to our practice, it is essential that we understand the new timelines, expanded scope, and procedural requirements to advise our clients effectively. new deadlines for registration and reporting one of the most immediate impacts for our clients is the consolidation and advancement of compliance deadlines. the previous split deadlines for returns and compliance forms have been harmonised to streamline the process. registration for new fis new deadline: entities that become financial institutions (fis) on or after 1 january 2026 must register on the ditc portal by 31 january of the following year (i.e. 31 january 2027 onwards). annual reporting deadlines consolidated date: from the 2026 reporting year onwards, both the crs return and the crs compliance form are due by 30 june annually. impact: this replaces the previous separate deadlines (31 july for returns and 15 september for compliance forms). first filing: for the 2026 reporting period, both documents must be submitted by 30 june 2027. principal point of contact (ppoc) requirements a major procedural change is the stricter requirement regarding the ppoc. the ditc now mandates that the ppoc must have a physical presence within the jurisdiction. requirement: every cayman fi must appoint a ppoc person (natural or legal) located in the cayman islands. address: the ppoc must have a physical address in the cayman islands; a mailing address alone is insufficient. deadlines for compliance: new fis (from 1 jan 2026): must appoint a cayman-based ppoc immediately upon registration. existing fis (registered before 31 december 2025): have a transitional period until 31 january 2027 to appoint a local ppoc and update their details on the ditc portal. note: this deadline was extended from the original 1 january 2027 date. notification: any changes to the ppoc must be notified to the ditc within 30 days. expanded scope: crypto-assets and digital money to modernise the framework, the definition of "financial assets" has been significantly broadened. this change ensures that the cayman islands' regime captures digital assets, mirroring the oecd’s crypto-asset reporting framework (carf). new inclusions the regulations now formally include: crypto-assets: this covers payment tokens (e.g., bitcoin, stablecoins), utility tokens, certain nfts, and security tokens. specified electronic money products. central bank digital currencies. client impact entities dealing in these assets must re-evaluate their classification to consider whether they now fall under the definition of an fi or have new reporting obligations regarding account holders holding these assets. due diligence procedures for both new and existing fis must be updated to capture and report on these asset types effectively. enhanced data collection and enforcement the amendments introduce more granular data requirements and a stricter penalty regime. data requirements controlling persons: fis must collect and report additional information regarding controlling persons, i.e. any natural person who exercises control over an entity. account classifications: there is a requirement for more detailed account classification data. self-certifications: valid self-certifications are critical. they must be collected from users to determine tax residency by 1 january 2027 for pre-existing accounts, and prior to (or upon) establishing a relationship for new accounts. enforcement and penalties immediate penalties: the ditc has the authority to impose administrative penalties immediately for non-compliance, removing the previous "breach notice" buffer. penalty amounts: failure to file returns or update ppoc details can result in penalties of up to us$12,200 (ci$10,000) per breach. scope: penalties apply to missed filing deadlines, failure to maintain current registration details, and failure to establish valid self-certifications. transitional provisions summary to assist in managing client expectations, here is the timeline for the transition: milestone date effective date 1 january 2026 first consolidated filing (2026 data) 30 june 2027 ppoc appointment (existing fis) deadline extended to 31 january 2027 ppoc appointment (new fis) from date of registration (starting 1 jan 2026) new fi registration deadline 31 january of the following year (e.g., 31 jan 2027 for 2026 fis) cima prudential information survey for registered persons in addition to the crs amendments, registered persons should be aware of new regulatory obligations introduced by the cayman islands monetary authority (cima). the prudential information survey (adr-046-75-02) is now required for entities registered as registered persons and is a critical part of cima’s ongoing supervisory and risk assessment objectives. purpose and scope the survey aims to enhance cima’s oversight of the securities investment business sector, focussing on activities, exposures, and risk profiles across registered persons. it is separate from, and in addition to, existing requirements such as the annual declaration. key deadlines the first prudential information survey covers the reporting period from 1 january 2025 to 31 december 2025. submission is required via the reefs portal between 1 january 2026 and 31 march 2026. submission requirements registered persons must accurately complete and submit the survey within the specified window. the guidance for registered person prudential information survey is available and should be consulted for technical and procedural details. timely submission is mandatory. this obligation is in addition to the annual declaration (adr-046-75), which remains due from 1 january 2026 to 15 january 2026. failure to meet either obligation may result in regulatory follow-up and penalties. any queries are to be directed to the securities supervision division at cima. action points for the team review client portfolios: identify clients dealing in digital assets who may now fall under the expanded scope. audit ppoc appointments: ensure all existing fi clients have a plan to appoint a cayman-based ppoc before the january 2027 deadline. update compliance calendars: adjust internal tracking systems to reflect the new 30 june consolidated deadline for 2027.

on 24 february 2026, the united kingdom government announced its most extensive package of sanctions against the russian federation since 2022. published by the foreign, commonwealth & development office, this package comprises nearly 300 new designations targeting critical russian revenue streams, energy infrastructure and military supply chains. energy sector targets and key measures the centrepiece of these new measures is the designation of pjsc transneft, one of the world's largest oil pipeline companies, reportedly responsible for transporting over 80 per cent of russian oil exports. the uk has also sanctioned: the '2rivers' oil network: 175 companies within this network have been designated. it is described as one of the largest shadow fleet operators globally and a major trader of russian crude oil. shadow fleet vessels: a further 48 oil tankers alleged to be involved in the illicit transportation of russian oil have been designated. broadening the scope: additional designations beyond the energy sector, the measures extend to several other critical areas to disrupt russia's war capability: military supply chains: 49 entities and individuals designated for sustaining russia's war machine, including international suppliers of goods and technology for drones. civil nuclear energy: 3 companies and 2 individuals sanctioned for attempts to secure contracts for new russian nuclear installations overseas. liquified natural gas (lng): 6 targets in the lng industry, including ships and key export terminals responsible for exporting russian lng. financial sector: 9 russian banks sanctioned for processing cross-border payments. in parallel, the uk foreign secretary, during a visit to ukraine, announced a £30 million support package for ukraine. this funding is allocated to repair energy infrastructure and to support justice and accountability initiatives. this latest package brings the total number of individuals, businesses and ships sanctioned under the uk's russia regime to over 3,000, while total uk support to ukraine since the start of the conflict now stands at £21.8 billion. the press release can be found here

on 18 february 2026, the luxembourg registration duty, estate and vat authority (aed) issued an important reminder for all reserved alternative investment funds (raifs). in its capacity, as the supervisory authority for aml/cft matters, the aed requires the timely submission of the annual rc (responsable du contrôle) report for the year 2025. the deadline for filing this mandatory report is 31 may 2026. this synthesis report details the raif's aml/cft activities and operations as of 31 december 2025. it must provide a comprehensive overview, including: risk assessments for aml/ft, mitigation measures and risk tolerance levels. results of due diligence on clients, initiators, portfolio managers and other key parties. statistics on suspicious transaction reports filed with the crf. details on the monitoring of financial sanctions and blocked positions. for more information, including detailed submission instructions, please find the press release here. ensure your organisation is prepared to meet this regulatory deadline. contact our expert legal team for guidance on navigating your aml/cft compliance obligations.

the offshore regulatory landscape continues to evolve at a rapid pace, with regulatory bodies in the cayman islands and british virgin islands introducing updates that reflect the growing global demand for transparency and compliance. as we move into 2026, several critical considerations have emerged for offshore entities, particularly those with ties to the middle east. this article outlines five key areas that demand attention and offers practical insights for businesses seeking to stay ahead of the curve. 1. regulatory inspections – increased depth and frequency both the cayman islands monetary authority (cima) and the bvi financial services commission (fsc) have significantly ramped up their inspection programmes for regulated financial institutions. the number of on-site visits has more than doubled year-on-year, with a strong emphasis on anti-money laundering (aml) compliance, corporate governance, and timely regulatory filings. inspections are increasingly drilling into operational substance: is the board meeting regularly? are minutes properly documented? is the aml officer empowered and independent? for middle east-based businesses operating offshore structures, this means preparing for regulatory scrutiny at a granular level. entities that conduct internal mock audits, maintain updated aml manuals, and rigorously document decision-making processes are best positioned to navigate these inspections with confidence. the message from regulators is clear: substance matters, and procedural compliance alone is no longer sufficient. for more on cima inspections, see here. for more on bvi and cayman inspections more generally, please see here. 2. anti-money laundering – heightened scrutiny across jurisdictions aml compliance has moved firmly to the top of the regulatory agenda in both the cayman islands and the bvi. regulators are no longer satisfied with policies that exist only on paper; they expect to see evidence of active implementation, regular review, and genuine risk-based decision-making. key areas of focus include: customer due diligence (cdd) and enhanced due diligence (edd): regulators are examining whether entities are applying appropriate levels of scrutiny to high-risk customers, including politically exposed persons (peps) and clients from higher-risk jurisdictions. for middle east-connected structures, this often means demonstrating robust source of funds and source of wealth verification. ongoing monitoring: static onboarding checks are insufficient. both cima and the fsc expect continuous transaction monitoring and periodic customer reviews, particularly for long-standing relationships where risk profiles may have evolved. suspicious activity reporting: entities must demonstrate that staff are trained to identify red flags and that there are clear internal escalation procedures. failure to file suspicious activity reports (sars) when warranted, or filing them late, is a common inspection finding. aml officer independence and empowerment: inspectors frequently probe whether the designated aml compliance officer and money laundering reporting officer have genuine authority, sufficient resources, and direct access to the board. nominal appointments without operational backing are increasingly being called out. third-party reliance and group-wide policies: where entities rely on introducers or group aml frameworks, regulators expect clear contractual arrangements, documented due diligence on the third party, and evidence that reliance is appropriate given the risk profile. for middle east businesses, the interconnected nature of regional financial networks and the prevalence of complex ownership structures-means aml compliance requires particular attention. entities should conduct independent aml audits, refresh policies to reflect current regulatory expectations, and ensure staff training is up to date and properly documented. 3. aeoi enforcement – the compliance net tightens automatic exchange of information (aeoi), including fatca and crs, has moved from framework-building into strict enforcement. in 2024, the oecd flagged over 30 per cent of participating jurisdictions for data quality issues. the cayman islands and bvi authorities are under pressure to demonstrate real oversight. middle east clients face mounting risks from inaccurate or incomplete aeoi reporting. common failures include: misclassification of financial institutions late or missed reporting deadlines lack of valid tins or self-certifications lack of adequate training of staff tax authorities in both jurisdictions are now ramping up inspections on crs compliance measures a development that financial institutions must adequately provision for. we recommend clients invest in their compliance systems and conduct periodic aeoi reviews, especially where underlying accounts are booked with regional banks or administered through complex holding structures. 4. economic substance – a timely reminder while economic substance laws in the cayman islands and bvi have been in force for several years, enforcement has matured significantly. both jurisdictions are now actively enforcing economic substance rules, with fines potentially exceeding us$100,000. beyond monetary penalties, failure to meet economic substance requirements could result in the loss of good standing, reputational damage, and even the strike-off of entities. common pain points include: passive holding companies with minimal board activity outsourced directorships with no regional oversight failure to evidence “directed and managed” test middle east businesses should treat economic substance as more than a checkbox — it’s now a live issue which should be monitored. 5. beneficial ownership – from shadow to spotlight transparency around beneficial ownership has become a cornerstone of global regulatory reform, and both the cayman islands and the bvi have established robust regimes. cayman islands: the jurisdiction introduced a beneficial ownership regime on 1 july 2017, requiring all in-scope entities to maintain a confidential register. the beneficial ownership transparency act, 2023, which became effective on 31 july 2024, expanded the scope and tightened disclosure rules, with formal enforcement commencing in january 2025. access remains limited to designated authorities, including the financial reporting authority, the tax information authority, and law enforcement. while the jurisdiction has expressed support for a legitimate interest access model, no plans for a public register have been confirmed. british virgin islands: the beneficial ownership secure search system (boss), launched in mid-2017, has now been operational for nearly nine years as a confidential national register. access is currently restricted to designated authorities under strict legal frameworks. while there is no current plan for a fully public register, the bvi is moving toward a 'legitimate interest' access regime in line with evolving global standards, expected to become fully operational by april 2026. for gulf-based businesses, this shift means confidentiality can no longer equate to opacity. entities must ensure filings are timely and accurate, understand who qualifies as a "beneficial owner," and avoid nominee arrangements that obscure true control. handled well, ownership transparency builds credibility and pre-empts reputational risk. final thoughts – strategy beats reaction the regulatory temperature is rising, and middle eastern businesses using offshore structures must shift from reactive compliance to proactive governance. those who invest now in legal clarity, operational readiness, and advisory support will not just survive the current environment; they will lead. at harneys, we work with clients across the globe to future-proof their structures in an increasingly interconnected regulatory world. if any of these topics resonate with your business, we would be delighted to discuss how we can assist.

cyprus is taking decisive steps to reshape its employment landscape. the government is currently advancing a draft bill to transpose directive (eu) 2022/2041 on adequate minimum wages into national law. as one of the few member states yet to fully adopt the directive, the push to pass the "adequate minimum wages law of 2025" brings significant changes for businesses and workers alike. we outline the critical provisions of this draft bill, how it aligns with european standards, and what it means for your operations. key provisions of the draft bill the new legislative framework introduces several mechanisms designed to ensure a decent standard of living, reduce in-work poverty, promote social cohesion and social convergence upwards and to reduce the gender pay gap. if you operate a business in cyprus, you need to prepare for the following core changes: the minimum wage adjustment committee: the government will appoint a dedicated committee comprising worker representatives, employer representatives, and independent academic experts. this body will assess and recommend minimum wage adjustments based on the cost of living, productivity, and economic growth. clear assessment benchmarks: to guide these adjustments, the bill references internationally recognised indicators. these include setting the minimum wage at 60 per cent of the gross median wage and 50 per cent of the gross average wage. strict public procurement rules: the law ties public contracts to wage compliance. companies bidding for public sector projects must ensure that they, and their subcontractors, comply with applicable collective agreements. a previous conviction for wage violations will bar a company from submitting public bids for three years. enhanced data collection: employers will face new reporting obligations. you will need to register specific wage and employment data into a designated digital system to help the government monitor compliance and report back to the european commission. promoting collective bargaining: if collective bargaining coverage falls below 80 per cent of the workforce, the state must establish a clear action plan to promote and expand it, protecting trade union members from discrimination. changes to the existing minimum wage regime until now, the determination of the minimum salary in cyprus has followed the provisions of the minimum wage law, cap. 183, as amended. under this regime, the minister of labour issued a decree pursuant to which the national minimum salary was set and periodically reviewed, with the current minimum monthly wage standing at eur 979 (eur 1,088 following completion of 6 months of continuous employment). this framework is now set for fundamental change: the new bill provides that the minimum statutory wage will instead be determined by a decree of the council of ministers, with a mandatory readjustment mechanism taking effect at two-year intervals. this marks a shift from ministerial discretion to a more institutionalised and predictable adjustment process. scope of application the bill provides for comprehensive employee coverage. it applies to all individuals working in the republic of cyprus under a contract of employment or any employment relationship, regardless of sector, unless they fall within a category of employers or economic activity that is expressly exempted by decree. this approach not only ensures broad protection for employees/workers but also sets a clear legal baseline for employers. offences and related penalties: clauses 21, 22, and 24 compliance is underscored by a series of offences and penalties under the bill: clause 21: offenses and penaltiesthis clause outlines offenses related to obstructing labour inspectors, providing false information, or failing to present required documents. penalties include imprisonment of up to three (3) months, a fine of up to €3,000, or both. however, there is a discrepancy in the monetary fine mentioned in the clause text, which states "€3,000" in one part and "€5,000" in another. clause 22: employer liabilityemployers are held accountable for offenses committed by their representatives or other persons acting on their behalf. if an employer demonstrates due diligence and proves the offence occurred without their knowledge or consent, they may avoid penalties, provided the representative or other person is convicted. in cases where an employee is indirectly employed (e.g., through a subcontractor), the primary employer may also be held jointly liable for ensuring compliance with minimum wage requirements. clause 24: sanctionsemployers violating the provisions of the law face imprisonment of up to two years, a fine of up to €10,000, or both. additional fines of €50 per day may apply for continued violations after conviction. courts may also order employers to pay outstanding wages owed to employees, calculated based on the statutory minimum wage. repeal of previous legislation it is important to note that upon the enactment of the new law, cap. 183 and all ministerial decrees issued under it will be expressly repealed. this consolidates the statutory framework into a single, modern instrument and eliminates potential conflicts or overlaps with previous regimes. alignment with the directive and notable variations the draft bill strongly aligns with the core objective of directive (eu) 2022/2041: promoting collective bargaining and ensuring statutory minimum wages are adequate. recent european court of justice case law, such as case c-19/23, highlights the european union's strict approach to worker protection and the necessity of transparent, predictable employment conditions. the cyprus bill reflects this rigorous standard. however, variations between the eu directive and the local draft bill have surfaced, sparking debate. the most notable point of friction involves the indicative reference values. while the eu directive presents the 60 per cent median and 50 per cent average wage figures as non-binding recommendations, local employer groups argue the draft bill embeds them too rigidly. furthermore, the mandatory data collection requirements go beyond the direct scope of the directive, introducing local administrative layers that duplicate existing digital reporting systems. reactions from employers and unions are these changes a necessary step for social convergence, or do they represent burdensome overregulation? the social partners in cyprus hold distinctly different views. employers and business chambers warn against the unilateral expansion of obligations. they argue that the data collection mandates will create severe administrative burdens without directly serving the directive's goals. furthermore, employers advocate for maintaining the flexibility of the existing national minimum wage law, which they believe allows for smoother adaptation to the specific economic realities of cyprus through structured social dialogue. conversely, trade unions broadly welcome the reform. they view the bill as a vital tool to enforce decent working conditions and close the gender pay gap. their primary request is for further clarification to ensure that statutory minimum wages encompass the minimum entry pay rates already agreed upon in sectoral collective agreements. implications for your business the transposition of directive (eu) 2022/2041 signals a shift towards stricter labour market regulation and enhanced worker protections in cyprus. for businesses, this means wage-setting will become a more structured, data-driven process overseen by a tripartite committee. you must prepare for increased administrative responsibilities regarding data reporting. additionally, if your business relies on public sector contracts, strict adherence to collective agreements and wage laws is no longer just good practice, it is a mandatory condition for participation. understanding these regulatory shifts is essential for maintaining compliance and securing your competitive edge. the draft bill transposing the directive is here the directive (eu) 2022/2041 can be found here ecj caselaw c-19/23 can be accessed here

the luxembourg special limited partnership (scsp) has become the go-to vehicle for private equity, venture capital, and real estate funds. it offers flexibility, tax efficiency, and minimal regulatory hassle, but only if you structure it correctly. get it wrong, and you could face serious regulatory consequences. what is an scsp? introduced in 2013, the scsp is luxembourg's answer to the anglo-saxon limited partnership. it operates without direct regulatory supervision and offers maximum contractual freedom to design your own investment structure. key features at a glance no legal personality - the scsp does not constitute a legal entity distinct from that of its partners. this is familiar territory for investors used to common law limited partnerships. partner structure - at least one general partner with unlimited liability (typically a limited liability company to contain risk) and one or more limited partners whose exposure is capped at their capital commitment. maximum flexibility - the partnership agreement governs almost everything: profit sharing, governance, transfers, carried interest, waterfalls, and more. you design the structure you need. formation and registration the scsp may be established by a private agreement (sous seing privé), without the need for a notarial deed. the partnership agreement must be registered with the luxembourg trade and companies register (registre de commerce et des sociétés) and must contain certain mandatory particulars, including the name of the partnership, its registered office, the identity of the partners, the purpose of the partnership, the duration (which may be limited or unlimited), and the contributions of each partner. the scsp must include the designation "scsp" or "société en commandite spéciale" in its name. management and governance the general partner is responsible for the management and representation of the scsp. limited partners may not participate in the management of the partnership; any involvement in management activities may result in the loss of their limited liability status. however, limited partners may exercise certain supervisory, advisory, and consent rights without jeopardising their limited liability, provided these rights do not extend to day-to-day management. tax treatment the scsp is, in principle, treated as fiscally transparent for luxembourg direct tax purposes, meaning that the partnership itself is not subject to corporate income tax or municipal business tax. instead, income and gains are attributed to the partners and taxed at their level according to their respective tax status and residence. this transparency makes the scsp particularly attractive for international investors seeking to avoid double taxation and to benefit from tax treaties applicable in their home jurisdictions. the scsp is also generally treated as a partnership (rather than a corporation) for the purposes of the tax laws of most other jurisdictions, though investors should confirm the treatment in their home jurisdiction on a case-by-case basis. structuring outside the scope of aifmd a key consideration when establishing an scsp is whether the structure falls within the scope of the alternative investment fund managers directive (aifmd). if an scsp qualifies as an alternative investment fund (aif) under aifmd, its manager (aifm) must either be authorised by the cssf or register under the partial exemption. the core test - aifmd applies to collective investment undertakings that (1) raise capital from multiple investors, (2) invest according to a defined investment policy, and (3) do so for the benefit of those investors. structures that fail any limb of this test fall outside aifmd entirely. de minimis thresholds - even if the scsp qualifies as an aif, its manager (gp) may escape full authorisation if assets under management stay below eur 100 million (with leverage) or eur 500 million (no leverage, no redemption rights for five years). registration with the cssf is still required, but not full authorisation. why legal advice is essential - the availability of these carve-outs is highly fact-specific. get it wrong, and the consequences are serious: enforcement action, reputational damage, and potential liability for the general partner. legal advice should be obtained at the outset to assess aifmd scope, identify the appropriate carve-out, and ensure the partnership agreement supports the intended regulatory position. ongoing monitoring is also critical: changes to investors, strategy, or aum may alter the analysis. practical considerations while the scsp offers considerable advantages, certain practical considerations should be borne in mind when establishing and operating the structure. investor profile - the scsp may not be suitable for all investor profiles. institutional investors subject to regulatory constraints may require the additional protections afforded by regulated fund structures. the choice between an scsp and a regulated alternative should be made in light of the specific objectives, investor base, and regulatory considerations applicable to the proposed structure. additionally, the private placement regime in each jurisdiction of the investor should be considered, as there may be additional considerations. anti-money laundering the applicable aml/ctf obligations for an scsp and the gp will depend on the final structure falling within the definition of an aif. beneficial ownership register - the scsp is required to identify its beneficial owners and file this information with the luxembourg register of beneficial owners (registre des bénéficiaires effectifs). compliance with beneficial ownership reporting requirements is an ongoing obligation. conclusion the luxembourg scsp has established itself as a highly flexible and tax-efficient vehicle for a wide range of investment and holding structures. its contractual freedom, tax transparency, and absence of legal personality make it an attractive option for sponsors, fund managers, and investors seeking to establish bespoke arrangements in a well-regarded european jurisdiction. given the complexity of the regulatory landscape and the significant consequences of inadvertent non-compliance, sponsors and investors should engage experienced legal counsel at the earliest opportunity.

on 13 february 2026, the cayman islands monetary authority (cima) extended the deadline for settling outstanding balances related to revised annual fees for regulated mutual and private funds. the new deadline is 15 march 2026, extended from the original 15 february 2026. penalties will be imposed after this date. this extension allows stakeholders additional time to complete internal reconciliations, administrative processes, and payment arrangements. funds must ensure all outstanding fees are fully paid by the new deadline to avoid non-compliance penalties. cima’s industry notice can be accessed here

on 4 february 2026, the cayman islands monetary authority (cima) published a notice to assist stakeholders in interpreting the revised fees for regulated mutual funds and private funds, effective 1 january 2026. these updates follow cima's earlier notice on 31 december 2025, which outlined broader fee adjustments across financial services to align with international standards and enhance administrative efficiency. key fee revisions for funds: registered funds: annual fee increased from us$3,675 to us$4,125. master funds: annual fee increased from us$2,625 to us$3,075. sub-funds (mutual funds): fee increased from us$300 to us$750 per sub-fund. sub-funds and aivs (private funds): fee increased from us$300 to us$525 per sub-fund or aiv. important details: fees for financial years ending on or before 31 december 2025 remain at pre-revised rates. for 2026, fees will be split into base and incremental amounts on the reefs portal. from 2027 onwards, they will appear as a single payment. the annual fee deadline remains 15 january each year. outstanding balances arising as a result of the revised fees must be settled by 15 march 2026 (previously the deadline was 15 february 2026, however the deadline has been extended as per the industry notice, available here). cima’s industry notice can be found here

the central bank of cyprus (cbc) recently issued a statement highlighting the european banking authority’s (eba) no-action letter on the interplay between the directive (eu) 2015/2366 on payment services (psd2) and the regulation 1114/2023 on markets in crypto-assets (mica) the no-action letter focusses on the licensing requirements for crypto-asset service providers (casps) offering services involving electronic money tokens (emts). the no-action letter in summary, the no-action letter emphasises that certain services relating to emts which the eba considers to be payment services under psd2. these include: transfer of crypto-assets involving emts on behalf of clients custody and administration of emts, including custodial wallets functioning as payment accounts at the same time, the eba considers certain services relating to emts to be exempt from the scope of psd2. these are: crypto-to-fiat exchanges crypto-to-crypto exchanges and intermediation in purchases of crypto-assets using emts finally, the no-action letter provides for a transitional period ending on 2 march 2026, by which point casps providing payment services in relation to emts must apply for a psd2 licence or partner with an entity authorised under psd2. subsequent guidance issued by the eba clarified that, subject to certain conditions, member state regulators may permit casps that manage to apply for a psd2 licence by 1 march 2026 to continue providing payment services in relation to emts to existing clients while their application is being assessed. more details as to the no-action letter can be found in our previous posts here and here. the cbc statement based on the above, the cbc has requested casps to conduct a self-assessment on whether the crypto asset services offered qualify as payment services, as per the provisions of the no-action letter and are therefore subject to licensing from the cbc. where a casp does need to be authorised by the cbc for the provision of payment services, the cbc has issued a dedicated application form for casps which can be accessed here. finally, the cbc requests that casps already providing emt-related payment services should have applied for authorisation by 20 february 2026. for more details cbc’s guidance can be accessed here

on 17 february 2026, the european union updated its list of non-cooperative jurisdictions for tax purposes. the current list includes 10 jurisdictions: american samoa, anguilla, guam, palau, panama, russia, turks and caicos islands, the united stated virgin islands (usvi), vanuatu, and vietnam. these jurisdictions have not fully met eu tax cooperation standards and are urged to improve their legal frameworks to meet these requirements. compared to the latest update from october 2025, fiji, samoa, and trinidad and tobago were removed from the list after addressing deficiencies, while vietnam and turks and caicos islands were added due to non-compliance with tax transparency and fair taxation standards. additionally, the eu council acknowledged progress in its "state of play" document. this document reflects ongoing eu cooperation with its international partners and the commitments of these countries to reform their legislation to adhere to agreed tax good governance standards. seychelles and antigua and barbuda were removed from the state of play document after meeting international tax standards. the eu continues to monitor listed jurisdictions and apply defensive tax measures where necessary. the press release can be found here

on 12 february 2026, the european banking authority (eba) issued an opinion regarding the end of the transition period under its no-action letter on the interplay between directive 2015/2366 on payment services (psd2) and regulation 1114/2023 on markets in crypto-assets (mica). the no-action letter focusses on the licensing requirements for crypto-asset service providers (casps) offering services involving electronic money tokens (emts). key points include: transition period guidance: the no-action letter advises national competent authorities (ncas) to permit casps that manage to apply for a psd2 licence by 1 march 2026 to continue providing payment services in relation to emts to existing clients while their application is being assessed. in order to benefit from this exemption, the eba proposes a number of conditions, including the submission of a fully completed application, no negative regulatory history and adequate and timely responses on the part of the applicant as well as restrictions on marketing activity. post-transition scenarios: the eba acknowledges that three scenarios may apply in respect of a casp following 1 march 2026: casps fully compliant with psd2: casps authorised to provide payment services under psd2 may continue to provide services in relation to emt transactions or partner with a licensed payment service provider (psp). pending applications: casps that have already submitted a licensing application under psd2 may continue to provide services in relation to emt transactions to existing clients, subject to the conditions outlined above and in the guidance. non-compliant casps: casps that fail to submit an application or to meet the relevant conditions must cease providing emt-related payment services and offboard clients in the eu. methods of partnering with psps: finally, the eba mentions that a method for a casp to partner with a psp, may be for that casp to be appointed as the psp’s agent under psd2. however, in that case the eba also notes that member state regulators should also assess whether the psp itself would need to be authorised as a casp in that case. for more information, the eba’s opinion can be found here and the eba’s no action letter can be found here.

the european securities and markets authority (esma), in october 2025, published its final draft regulatory technical standards (rts) for open-ended loan-originating alternative investment funds under the aifmd. these standards focused on liquidity management, stress testing and redemption policies for open-ended aifs. key provisions include: liquidity management: aifms must ensure sufficient liquidity to meet redemption requests, considering factors like loan maturities, cash flows, and investor behaviour. the rts removed the earlier proposed requirement to hold a fixed proportion or “target amount” of liquid assets. stress testing: annual liquidity stress tests are mandatory, with higher frequencies required for specific fund characteristics. redemption policies: aifms must align redemption terms with the fund's liquidity profile and investment strategy. the rts aim to synchronise practices across the eu, boosting investor protection and financial stability. the draft has been submitted to the european commission for adoption, with adoption not expected before 1 october 2027. esma’s final report can be found here and here

on 16 february 2026, the uk government, through the office of financial sanctions implementation (ofsi), initiated a call for evidence on the implementation of the "ownership and control" (o&c) test within uk financial sanctions regulations. this initiative requests to gather insights from businesses, legal professionals and other stakeholders to evaluate the clarity, effectiveness, and proportionality of the current framework. key objectives: understanding challenges: the o&c test aims to prevent sanctioned individuals or entities from circumventing sanctions through complex structures or proxies. however, industry feedback highlights challenges in assessing "hypothetical control", the potential ability of a designated person (dp) to influence an entity, even without active involvement. this ambiguity can lead to increased compliance costs, legal risks and operational delays. evaluating practical impacts: the call for evidence focuses on the practical difficulties of implementing the control test, particularly the hypothetical element, and its impact on compliance, business decisions and de-risking behaviours. exploring typologies of control: the government seeks input on the utility of control typologies, such as direct, indirect and hypothetical control, to improve the assessment process. scope of the call for evidence: the call for evidence focuses on three primary areas: the prevalence and nature of hypothetical control in sanctions cases. implementation challenges and associated costs. the practical utility of control typologies in compliance efforts. stakeholders are invited to submit evidence, including anonymised case studies, by 13 april 2026. the call for evidence and how to respond can be accessed here. the uk government’s blog can be found here.

a significant legislative change is approaching for cyprus employers. the draft bill transposing the eu pay transparency directive (2023/970) into national law will soon usher in a new era of accountability for equal pay. with enforcement expected by 7 june 2026, businesses must begin preparations now. this summary provides a high-level overview of the key changes, offering a glimpse into the comprehensive analysis detailed in our full article. are you ready to navigate this new landscape? the core objective: enforcing equal pay at its heart, the new legislation strengthens the principle of equal pay for equal work or work of equal value. it uses pay transparency and robust enforcement mechanisms to close the gender pay gap. the rules apply broadly, covering all sectors and employment types, including part-time, fixed-term, and agency workers. the cyprus bill vs. the eu directive: key distinctions while the cyprus bill implements the directive’s core requirements, it introduces a more prescriptive and stringent compliance framework in several areas. employers must be aware of these key distinctions: granular documentation: the bill requires employers to document not only their use of objective, gender-neutral job evaluation criteria (skills, effort, responsibility, and working conditions) but also how these criteria were weighted and agreed upon. retrospective data requests: upon request, employers must provide gender pay gap data for up to four previous years. this may require retrieving data from as far back as 2022. personal liability for directors: the bill introduces personal liability for directors and officers for offences, unless they can prove a lack of consent, complicity, or negligence. mandatory publication: while employers may choose whether to publish reports on their websites, the department of labour relations (the monitoring body) will publish comparable employer-level data, ensuring external scrutiny. key employer obligations the new requirements will transform the entire employment lifecycle. key obligations include: fair and transparent pay structures: employers must establish and maintain pay structures based on objective, gender-neutral, and weighted criteria for job evaluation. pre-employment transparency: job applicants must be informed of the initial pay or pay range before an interview. asking about salary history is banned. transparency of pay progression: the criteria for pay levels and progression must be documented and made accessible to employees. right to information: employees gain the right to request information on their individual pay and average pay levels for their category of work, broken down by gender. gender pay gap reporting: reporting requirements are staged by employer size, starting from 7 june 2027 for companies with 150+ employees. 250+ employees: annual reporting. 150-249 employees: triennial reporting. 100-149 employees: triennial reporting (from 7 june 2031). joint pay assessment: if a gender pay gap of 5 per cent or more is identified and cannot be justified, employers have six months to rectify it. failure triggers a mandatory joint pay assessment with employee representatives. enforcement, protection, and penalties a robust framework will enforce these new rules: shift of burden of proof: in any legal proceedings, the burden of proof will shift to the employer to demonstrate that no breach of equal pay rules has occurred. monitoring body & ombudsman: the department of labour relations will collect and publish data, while the ombudsman will handle individual complaints and discrimination claims. penalties: non-compliance can result in an offence which may corresponds to a fine up to €10,000 and / or imprisonment for up to six months. personal criminal liability may extent up the chain of command, including to directors and other officers. anti-victimisation: dismissing or disadvantaging an employee for exercising their rights under the bill is prohibited, with remedies including compensation for material loss and non-material harm, such as distress, which is without cap. this corresponds to a claim in a civil court and will be additional to any penalties imposed for a criminal offence, practical steps for employer readiness given the sweeping changes and approaching deadlines, employers should: review recruitment processes end-to-end: update pre-application and offer letter language and documentation, ensuring gender-neutral and non-discriminatory recruitment process, where pay ranges must be communicated clearly and salary history questions are removed from interview scripts. revise existing employment contracts: revise remuneration and pay-secrecy / confidentiality clauses, as applicable, to remove restrictions / prohibitions and to include nascent employee rights, including right to information. update policies and handbooks: establish matrices, procedures and strategy for defining a clear pay disclosure strategy, promotions / pay rises, reflecting pay transparency rights, request processes, and anti-retaliation guarantees. identify and codify strategy for consultations with employees / employee representatives as well as other pertinent communication protocols. identify and review of current compensation packages and establish weighted pay structures: map all roles / employee categories to objective, gender-neutral criteria and weightings; secure joint agreement with employee representatives, as required. systematise data: set up hr/payroll systems for four-year retrospective data extraction and reporting. hr training: train hr / recruiter staff and managers. conduct gdpr gap analysis: mitigate risks from increased transparency, particularly around data privacy and small categories. use the ergani system: leverage cyprus’ centralised digital platform for reporting and compliance. engage with remediation windows: ensure robust tracking of pay gaps and remediate proactively within the six-month period if gaps are detected. document governance: assign pay transparency oversight to board/leadership level and keep comprehensive compliance records. conclusion cyprus is set to implement one of the eu’s most demanding pay transparency regimes, setting a high bar for compliance, accountability, and governance. employers should treat these requirements as imminent and invest in robust, documented processes. as the cypriot bill ushers in a new standard for pay transparency and equal pay compliance, organisations should consider preparation a strategic imperative. to support employers and hr leaders as the enforcement date approaches, we will publish a comprehensive guide with analysis and recommendations closer to the directive’s implementation, in early june. for tailored guidance, reach out, our team stands ready to support your compliance journey. the cypriot bill can be found here and the eu directive here

on 19 january 2026, the cyprus securities and exchange commission (cysec) issued circular c751, providing guidance to regulated entities on obligations under the digital operational resilience act (dora). key points include: ict-related incident reporting: classification and reporting of major ict-related incidents entities must ensure accurate classification and timely reporting of major ict-related incidents, adhering to the criteria in commission delegated regulation 2024/1772. figure 1 of circular c751 provides a helpful diagram indicating the approach for classifying major incidents under dora. register of information: format of the submission submissions must be in xbrl-csv format through the cysec xbrl portal, which can be accessed here, with annual deadlines of 28 february for data as of 31 december of the prior year. ict risk management framework entities must establish and maintain a documented ict risk management framework, reviewed annually or after major incidents. responsibilities for ict risk oversight must be independent, and internal audits should be conducted regularly by qualified auditors. cysec portal: designation of ict auditor and responsible personnel entities must designate the ict auditor responsible for the internal audit of the ict risk management framework and the person responsible for the control function in the cysec portal and can be found here. for further details, circular c751 can be found here