Asset Recovery Comparative Guide

1 Civil

1.1 Civil proceedings: (a) What remedies for asset recovery are available in your jurisdiction? (b) What type of assistance will be provided to those seeking substantive relief in your jurisdiction when faced with the dissipation of assets? (c) Can civil proceedings run in parallel to criminal proceedings relating to the same matter or does one take precedence over the other? (d) Can evidence gathered in criminal proceedings be used in civil proceedings? (e) Are foreign freezing orders/injunctions enforceable in your jurisdiction and what are the limitations to registration/enforcement of such foreign orders? (f) What other considerations should be borne in mind in relation to civil asset recovery proceedings in your jurisdiction?

(a) What remedies for asset recovery are available in your jurisdiction?

There are several remedies available to address the misappropriation or unlawful transfer of assets, depending on:

• the specific circumstances of each case; and
• the causes of action pursued in each case.

The primary remedy available is an award for damages to compensate the claimant for the loss it has suffered. Alternatively, where this is appropriate, a restitutionary award may be ordered and the defendant that has unjustly benefited at the claimant's expense should return or restore the value or benefit it has received.

Although, punitive damages may also be available in certain cases in principle, these are generally very rarely awarded in practice.

Where damages are inadequate to sufficiently compensate the claimant, a perpetual injunction ordering the defendant to do or refrain from doing a certain act may be issued.

Proprietary remedies are also available where a fiduciary has acted in breach of its obligations, entitling the claimant to:

• a declaration that the defendant holds the asset on constructive trust for its benefit; and
• an order requesting the defendant to transfer the asset to the claimant.

A declaratory judgment defining the rights and liabilities of the relevant parties may also be issued.

(b) What type of assistance will be provided to those seeking substantive relief in your jurisdiction when faced with the dissipation of assets?

The Cyprus courts have broad discretion to issue freezing orders to prevent a party from dissipating assets. The court's jurisdiction derives from:

• Article 32 of the Courts Law (14/1960) (as amended); and
• Part 25 of the new Civil Procedure Rules (CPR) (entered into force on 1 September 2023).

Freezing orders are commonly issued where there are sufficient grounds to show that unless the freezing order is issued, there is a real risk that the respondent will alienate or dissipate assets. The test is an objective one, taking into consideration the effect of the potential unjustified dealing or dissipation of assets on the satisfaction of a future prospective judgment. These may be granted:

• against both tangible and intangible assets anywhere in the world; and
• against assets both directly and indirectly controlled by the respondent.

A freezing order also covers assets that are legally or beneficially owned. These orders are commonly sought and granted on an ex parte basis (i.e., without notice to the defendant).

Freezing orders against non-parties may also be issued. The claimant need not have a cause of action against those third parties but merely grounds to suppose that the third party holds assets that the principal defendant is beneficially entitled to and can be shown that the principal defendant controls or has power to dispose of the assets.

Ancillary disclosure orders are also commonly issued requiring the respondent to disclose details of its assets to ensure the effectiveness of a freezing order.

In instances where a freezing order will be deemed insufficient to protect the claimant, the court may order the appointment of a receiver, who will take control of the defendant's assets until the adjudication of the action.

(c) Can civil proceedings run in parallel to criminal proceedings relating to the same matter or does one take precedence over the other?

Civil and criminal proceedings can run in parallel in Cyprus. However, the courts maintain discretion to stay or dismiss proceedings on the ground of abuse of process where a party promotes parallel proceedings to oppress its opponent or, for ulterior purposes, such as to obtain collateral advantage or tactical advantage.

(d) Can evidence gathered in criminal proceedings be used in civil proceedings?

There are no specific rules on the use of evidence gathered in criminal proceedings in civil proceedings. Nevertheless, the general principles relating to the admissibility of evidence will apply. If the court deems that such evidence is relevant by reference to the issues in the case, it will be admissible unless it:

• falls within an exclusionary rule of law; or
• has been obtained by means contrary to the provisions of the Constitution.

(e) Are foreign freezing orders/injunctions enforceable in your jurisdiction and what are the limitations to registration/enforcement of such foreign orders?

Foreign freezing injunctions are not directly enforceable and prior registration and enforcement are required. The process depends on the specific facts of each case and the country where the order was issued, as there is no unified system for registration and enforcement.

Interim freezing orders issued by the courts of EU member states (except Denmark) may be recognised and enforced in Cyprus under the EU Recast Regulation (1215/2012). The processes therein allow for the recognition and enforcement of a freezing order where:

• the original application for the measure was made on notice to the defendant; or
• the judgment containing the measure is served on the defendant prior to enforcement (Recital 33 and Article 2 of the regulation).

Further, under the regulation, for a freezing order to be enforceable in Cyprus, it must be issued by a court that has jurisdiction as to the substance of the dispute. If this is not the case, the measure will not be eligible for enforcement under the regulation and the claimant will have to apply for a new freezing order in Cyprus.

Generally, the process for enforcing an interim freezing order in Europe is relatively straightforward.

Moreover, freezing orders issued by the courts of countries with which Cyprus has entered into bilateral or multinational treaties may be recognised in Cyprus subject to the provisions of those treaties. Several treaties provide for the enforcement of a much narrower class of judgments and it is thus essential to examine the provisions of the applicable treaty in each case.

Freezing orders issued by a court of a non-EU member country or a country with which Cyprus has not entered into a bilateral treaty will not be eligible for enforcement. To be enforceable under the remaining common law regime, the judgment must be:

• for a debt or definite sum of money; and
• final and conclusive.

(f) What other considerations should be borne in mind in relation to civil asset recovery proceedings in your jurisdiction?

Given that Cyprus is a common law jurisdiction, claimants initiating civil asset recovery proceedings in the jurisdiction enjoy the advantage of proving their case on the usual civil standard of proof – that is, the 'balance of probabilities', which is considered to be a lower standard. Essentially, the claimant must prove that the fact in issue more likely occurred than not.

1.2 Asset freezing: (a) What provisional/interim measures to secure assets are available in your jurisdiction? (b) What are the evidentiary and procedural requirements for obtaining provisional/interim measures? (c) Are any alternatives to provisional measures available in your jurisdiction? (d) Once the assets have been secured, how are they generally managed? What specific considerations and concerns should be borne in mind in this regard? (e) What other considerations and concerns should be borne in mind at this stage of the process?

(a) What provisional/interim measures to secure assets are available in your jurisdiction?

There are a variety of provisional/interim measures available, which are appropriate in different scenarios, including the following:

• Freezing orders: These are often issued when there is a real risk of alienation or dissipation of assets, both movable and/or immovable, situated in Cyprus or abroad.
• Freezing orders against non-parties (Chabra orders): These are obtained against parties against which the claimant has no cause of action but where such persons appear to hold, or control assets to which the principal defendant is beneficially entitled.
• Disclosure orders: These are commonly issued ancillary to a freezing order and require a respondent to disclose details of its assets.
• Appointment of a receiver: The Cyprus courts have discretion to appoint a receiver in appropriate cases – for example, where assets need to be managed, preserved or otherwise exploited, either within or outside the jurisdiction. Such an order is principally issued where a freezing order is considered to be insufficient on its own.
• Search orders: These are aimed at preserving evidence that might otherwise be destroyed or concealed by the respondent. The order allows a claimant or their representatives to enter the respondent's premises and inspect, search for, collect and otherwise preserve documents and materials.
• Orders for the detention, custody or preservation of relevant property under CPR 25.1(1). There is no reported case law defining the "relevant property" that would fall under CPR 25.1(1) but it is likely that the Cyprus courts would follow the principles established through common law whereby it is established that the term "property" does not necessarily have to be physical property (citing UTB [2018] EWHC 1663 (Ch)).
• Orders in aid of foreign proceedings: The Cyprus courts have discretion to grant interim relief in support of judicial and arbitral proceedings abroad.
• Norwich Pharmacal orders: These are also commonly sought to identify the proper defendant to an action or to obtain information necessary for initiating or furthering proceedings. The respondent must be either involved or mixed up in a wrongdoing, whether innocently or not.

(b) What are the evidentiary and procedural requirements for obtaining provisional/interim measures?

The Cyprus courts are empowered to issue interim relief at any stage, even before a claim has been issued.

Pursuant to Article 32 of the Courts Law, interim relief will generally be granted only where:

• there is a serious question to be tried;
• there appears to be a probability that the plaintiff is entitled to relief;
• unless the interim order is issued, it would be difficult or impossible to ensure complete justice at a later stage; and
• the grant of such relief would be just and convenient under the circumstances of each case.

When the application is to be made without notice to the other side, the applicant is under an obligation of full and frank disclosure which requires it to disclose all matters that are material to the court, including any relevant legal principles or facts which are not in its favour.

An application for an interim order should be made in accordance with:

• Part 23 of the CPR; and
• the rules relating to interim orders as stipulated in Part 25 of the CPR.

The application should be:

• supported by written evidence in the form of an affidavit; and
• where practicable, accompanied by a draft order prepared by the applicant.

The applicant must provide an undertaking to pay damages to the respondent for loss that it may suffer as a result of the order issued, where the court determines that this is warranted.

(c) Are any alternatives to provisional measures available in your jurisdiction?

The Cyprus courts have jurisdiction to issue interim declarations (CPR 25.1), although as yet there is no authority providing for such a remedy.

It is also possible to seek inspection of property before the filing or any proceedings or even inspection of property of a non-party. CPR 25.5 allows the Cyprus courts to issue an order for the inspection of property which may potentially become the subject matter of subsequent proceedings or which is relevant to the issues that will arise in such proceedings.

(d) Once the assets have been secured, how are they generally managed? What specific considerations and concerns should be borne in mind in this regard?

Where the assets are secured through court injunctions such as freezing orders, these will typically be managed in accordance with the terms of the specific order. Usually, a freezing injunction will be subject to a maximum limit – normally to the value of the claim, so that the defendant will not be affected more than is justified.

All interim orders contain a penal notice warning the respondent or any other relevant third party that breach of the order, or even assisting the respondent in breaching the order, may result in it being held in contempt of court. Where the court finds that a person is in contempt, it may order:

• the payment of a fine;
• the confiscation of their assets; or
• potentially, even imprisonment.

(e) What other considerations and concerns should be borne in mind at this stage of the process?

Following the recent amendment of Article 32 of the Courts Law, which governs the Cyprus courts' jurisdiction to issue injunctive relief, the Cyprus courts' jurisdiction has been expanded and injunctions may be issued in aid of judicial or arbitral proceedings that took place, are taking place or are going out of the jurisdiction, in instances where:

• the respondent is within the jurisdiction;
• the property or the subject matter of the remedy sought is located within the jurisdiction; or
• there is such a link with Cyprus rendering the Cyprus court appropriate to hear and decide the application.

It is also common for freezing orders to include carveouts that allow the respondent to pursue its ordinary and proper course of business and maintain ordinary living expenses.

1.3 International cooperation: (a) What is the process for requesting assistance in asset recovery investigations? What specific considerations and concerns should be borne in mind at each stage of the process (tracing; freezing; confiscation; disclosure)? (b) What types of international assistance can be obtained in civil asset recovery proceedings? (c) With what level of detail and specificity should the documents to be obtained from other jurisdictions be described (eg, is a generic description or category of documents permissible, or is the exact date and name required)? (d) How will the courts in your jurisdiction respond to a foreign request for assistance? What specific considerations and concerns should be borne in mind in this regard?

(a) What is the process for requesting assistance in asset recovery investigations? What specific considerations and concerns should be borne in mind at each stage of the process (tracing; freezing; confiscation; disclosure)?

There is no formal process for requesting asset recovery investigations in Cyprus and there are no established procedures designed for this purpose. However, it is possible to seek evidence with the assistance of the court before proceedings are filed or where proceedings are filed.

Pre-action disclosure may be ordered in certain circumstances pursuant to CPR 31.7. The court has the power to order a potential defendant to subsequent proceedings to disclose documents following an application by the potential claimant. Such an order will be issued only if:

• the applicant and the respondent are likely to be parties to the subsequent proceedings;
• the evidence supporting the application follows the criteria stipulated in CPRs 31.7(2) and (c); and
• none of the reasons for opposing such a disclosure as provided in CPR 31.5(7) apply.

The court may also issue an order for pre-action disclosure against non-parties before proceedings have started (Norwich Pharmacal orders) where the respondent has been involved or mixed up in a wrongdoing, whether innocently or not.

The Foreign Courts (Evidence) Law (Cap 12) governs requests from foreign courts in relation to civil and commercial matters.

(b) What types of international assistance can be obtained in civil asset recovery proceedings?

The Cyprus courts may issue provisional/interim measures in aid of foreign civil proceedings. When considering whether to grant such a measure, a jurisdictional approach will be adopted (see question 1.2(e)).

Parties within the jurisdiction or abroad may also obtain evidence from a witness in another jurisdiction for use in proceedings filed with the Cyprus courts or foreign proceedings, depending on the circumstances of each case. These may be achieved through letters of request – that is, a request by the requesting court to a court in another jurisdiction for the taking and transmission of evidence. Letters of request between courts within the European Union, with the exception of Denmark, requesting the taking of evidence are governed by the EU Taking of Evidence Regulation (1206/2001), which was replaced by the EU Recast Evidence Regulation (2020/1783).

Where the request is received by a court of a foreign state which is not an EU member state, this is handled by the Supreme Court in accordance with the provisions of the Foreign Courts (Evidence) Law. This law supplements the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, to which Cyprus is a contracting party. The convention governs requests for the taking of evidence between contracting states.

(c) With what level of detail and specificity should the documents to be obtained from other jurisdictions be described (e.g., is a generic description or category of documents permissible, or is the exact date and name required)?

Generally, the description of the documents requested should be:

• as detailed as possible; and
• confined to documents which would be admissible and relate to the issues in dispute.

Although the foreign court will ultimately decide whether to grant the request, the Cyprus court, acting in its capacity as the requesting court, will need to be satisfied that:

• the foreign court will likely be receptive to the request; and
• the recipient will be able to identify the documents sought at least with sufficient certainty.

Ultimately, the level of specificity will very much depend on the rules and applicable laws of the receiving country and it is prudent to seek local advice before seeking the request.

(d) How will the courts in your jurisdiction respond to a foreign request for assistance? What specific considerations and concerns should be borne in mind in this regard?

Α letter of request will generally be executed expeditiously. The Hague Evidence Convention and the Recast Evidence Regulation provide for specific grounds for refusal and do not permit member states to refuse the execution on other grounds (see Article 12 of the Hague Evidence Convention and Article 16 of the Recast Evidence Regulation).

Nonetheless, the Cyprus court will consider whether execution is impossible due to its internal practice or any practical difficulties. For example, the court will not grant the request where the request is vague or unclear or disproportionately wide and thus the documents sought cannot be identified. Furthermore, where the request relates to the examination of a witness, the court will not execute the request where the witness concerned invokes the right to refuse to give evidence.

1.4 Cryptocurrencies: (a) Do cryptocurrencies constitute 'property' for interim remedy/enforcement purposes? (b) Does your jurisdiction have experience with investigations, interim remedies or enforcement actions in respect of cryptocurrencies? (c) How will the question of governing law and jurisdiction be determined in respect of cryptocurrencies? (d) Are there any other considerations that should be borne in mind in this regard?

(a) Do cryptocurrencies constitute 'property' for interim remedy/enforcement purposes?

At the time of writing, the only legal framework in place in Cyprus relating to crypto-assets is the Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007 ('AML/CFT Law'), which includes provisions on crypto-asset services providers. The EU Markets in Crypto-assets Regulation (2023/1114) – which, among other things, regulates the issuance and trading of crypto-assets – will apply from 30 December 2024 and provides for a broad definition of 'crypto-assets'. Crypto-assets are expressly included in the statutory definition of 'property' pursuant to the AML/CFT Law.

While at the time of writing, there is no Cypriot case law clarifying the matter, the UK courts have accepted that cryptocurrencies constitute property under English law (Tulip v Van der Laan [2023] EWCA Civ 83). In the absence of relevant Cyprus case law, English common law and equity are applicable pursuant to Section 29 of the Courts Law and therefore the Cyprus courts will most likely follow the legal precedents set by the English courts.

(b) Does your jurisdiction have experience with investigations, interim remedies or enforcement actions in respect of cryptocurrencies?

The Cyprus Financial Intelligence Unit (MOKAS) recently announced the creation of the Virtual Assets and Fintech Subsection to handle reports relating to virtual assets/crypto-assets. Among its key responsibilities, MOKAS is responsible – in cooperation with the police – for:

• the provision of assistance for the tracing and freezing of illegal proceeds where these involve cryptocurrencies; and
• the procedure for the safekeeping and management of such frozen crypto-assets.

MOKAS has already announced the successful execution of a court order issued by the Nicosia District Court relating to the freezing of cryptocurrencies worth more than €90,000. The order was sought and obtained by MOKAS.

Besides freezing orders that may be obtained pursuant to the AML/CFT Law, the Cyprus courts also have jurisdiction to issue interim and provisional orders according to Article 32 of the Courts Law (see question 1.2(b)). As of the timing of writing, there is no published case law which explicitly deals with the matter.

(c) How will the question of governing law and jurisdiction be determined in respect of cryptocurrencies?

The decentralised and intangible nature of cryptocurrencies, which are not related to any specific location, raises the questions of:

• what law should be applied to determine any potential dispute; and
• what would be the appropriate jurisdiction in which to bring an action.

The issue becomes complicated where there is no contract between the parties and thus the issues of governing law and jurisdiction cannot be determined with reference to such an agreement.

Given that as yet there is no relevant case law on the matter, the Cyprus courts will most likely follow the approach taken by the English courts on the matter. In Ion Science Ltd v Persons Unknown (unreported), 21 December 2020 (Commercial Court), the court concluded that the lex situs (location) of a crypto-asset is the place where the person or company that owns it is domiciled. The court's view was subsequently reaffirmed in D'Aloia v Persons Unknown [2022] EWHC 1723. The court will likely take the view that:

• the domestic law of the place where person or company that owns the crypto-asset is domiciled will be the governing law of the claim; and
• the relevant jurisdictional rules of that place will also determine the jurisdiction.

(d) Are there any other considerations that should be borne in mind in this regard?

While cases involving crypto-assets are still uncommon in Cyprus, these are expected to multiply in light of the rise in popularity of cryptocurrencies which has inevitably led to a corresponding rise in cases of crypto-fraud.

2 Investigations

2.1 Who identifies the assets in civil and criminal asset recovery proceedings?

In civil proceedings, the burden of identifying recoverable assets falls on the claimant. Usually, the measures available to individuals are those available in litigation, such as:

• disclosure, search and tracing orders;
• the deployment of expert services such as accountants and analysis; and
• the search of publicly available information.

In criminal proceedings, it is up to the prosecution to identify the assets with assistance from the police. The financial intelligence unit in Cyprus is MOKAS, which receives, evaluates and analyses:

• suspicious transaction reports and suspicious activity reports submitted by obliged entities; and
• other information relating to the legalisation of the proceeds generated from:
• • illegal activities;
  • predicate offences; and
  • the financing of terrorism.

It is also responsible for the dissemination of the results of its analyses to competent authorities for:

• the conduct of investigations (the police); or
• information purposes.

MOKAS does not conduct criminal investigations. MOKAS cooperates and exchanges information with foreign counterpart financial intelligence units and also executes requests for mutual legal assistance submitted by foreign authorities in relation to the freezing and confiscation of criminal proceeds. Additionally, MOKAS is the asset recovery office for the purposes of cooperation with counterpart offices of EU member states for the recovery of illegal proceeds.

2.2 How are the targets of the investigation identified?

Where the identity of the wrongdoers is not known, it is possible to seek disclosure orders of the Norwich Pharmacal type to reveal and investigate the correct defendants by joining them to an action for asset recovery. Such pre-action discovery may also be employed to identify other types of information that will assist the victim in:

• pursuing its claims;
• investigating the persons that are ultimately responsible; and
• recovering its losses.

Such orders may, under certain circumstances, be issued against non-parties such as banks, nominee service providers and other information holders enabling interested parties to obtain necessary information to pursue their claims. It is clarified that this type of relief is not available and will be considered as a fishing expedition where the necessary information to bring proceedings is already known.

In public prosecutions, following the filing of official complaints with the police, the latter are primarily responsible for identifying the targets of the investigation. Complainants can feed relevant information they possess to the investigating authorities.

In order to identify the targets of investigation, the police and/or MOKAS may cooperate with:

• the Customs Department;
• the Ministry of Justice and Public Order;
• the Ministry of Finance;
• the Registrar of Companies and Official Receiver;
• the Tax Department; and
• supervisory authorities including:
• • the Central Bank of Cyprus;
  • the Cyprus Securities and Exchange Commission;
  • the National Betting Authority;
  • the National Gaming and Casino Supervision Authority;
  • the commissioner of taxation;
  • the commissioner of insurance;
  • the Council of the Institute of Certified Public Accountants of Cyprus; and
  • the Council of the Cyprus Bar Association.

2.3 What role (if any) may regulatory/law enforcement bodies play in locating assets in aid of civil proceedings?

Generally, regulatory/law enforcement bodies do not play a direct role in locating assets in aid of civil proceedings. However, they may have an indirect effect in this regard by means of their involvement in contempt proceedings where a respondent has breached orders that may relate, among other things, to its obligation to provide information and documents. The criminal liability associated with contempt may create pressure in complying with orders that facilitate asset tracing in civil proceedings.

2.4 Will regulatory/law enforcement bodies share evidence to be used in civil asset recovery/tracing proceedings?

Although there is no law prohibiting an attempt by an individual to seek information from regulatory/law enforcement bodies, in practice, claimants in civil proceedings will have to rely on their own resources and will not easily succeed in obtaining information from regulatory/law enforcement bodies.

Additionally, in cases of disclosure orders against third parties and as long as the mere witness rule is not breached, it is possible for disclosure orders to be issued against public authorities.

According to the Prevention and Suppression of Money Laundering Activities Law (188(I)/2007), the Cyprus Financial Intelligence Unit (MOKAS) has the authority to trace and recover proceeds of crime and other related property. This law imposes no obligation on MOKAS to share evidence in civil proceedings. Moreover, confiscated property cannot be used to meet civil claims for damages.

2.5 Are there restrictions on the use of documents/ information obtained as part of civil or criminal proceedings in either local proceedings or foreign proceedings?

Given the nature of disclosure and search orders, the Cypriot courts follow strict collateral use restrictions limiting the use of documents/information in either local or foreign proceedings. In practice, search and disclosure orders are issued by the court with an express undertaking that they should not be used in any other than the requested proceedings unless relevant leave is obtained by the court. Even if such an undertaking is not expressly stated by the court, the undertaking is implied provided that the disclosure was made involuntarily (eg, by a court order). Procedurally, if the necessary conditions are met, it is possible for this undertaking to be lifted or amended to allow the use of the documents/information obtained as part of civil or criminal proceedings in proceedings other than those listed in the undertaking.

Another restriction may be that of information and documents covered by privilege.

2.6 What different sources of information can be drawn upon in an asset recovery investigation (eg, public information; government agency information; company information); and what restrictions and requirements apply in this regard?

Examples of sources of information include the following:

• The Archive of the Registrar of Companies operates as a database of all Cyprus based companies and partnerships. The register is publicly accessible and contains information about a company's:
• • current and historic standing;
  • registered address;
  • directors;
  • shareholders;
  • charges; and
  • annual accounts.
• The Ultimate Beneficial Owners Register contains information about beneficial owners of:
• • companies registered in Cyprus;
  • European public limited liability companies; and
  • partnerships.
• Such information includes:
• • personal information such as names, nationalities and identification documents;
  • the nature of the beneficial ownership; and
  • any changes to the beneficial ownership.
• This register is not publicly accessible and access is currently allowed to competent and supervisory authorities as well as obliged entities in the context of conducting due diligence processes.
• The Land Registry, operated by the Ministry of the Interior, Department of Lands and Surveys, contains information about immovable property and property ownership in Cyprus. This register is not publicly accessible and only interested parties can request information on property in which they have a legitimate interest. Information is provided in the form of a 'search certificate' which is issued once an application has been filed and the prescribed fee has been paid.
• The Central Depository of the Cyprus Stock Exchange is confidential and no information is disclosed except to the extent that this is obligatory by law or a court order
• Other sources of information include:
• • the Register of the Road Transport Department;
  • the Cyprus Ships Register, operated by the Department of Merchant Shipping;
  • the Cyprus Aircraft Register, operated by the Department of Civil Aviation; and
  • the IP Department of the Companies Registry.

2.7 Under what circumstances will a criminal asset recovery investigation be initiated in your jurisdiction?

A criminal asset recovery investigation will be initiated in Cyprus at the discretion of the regulatory and enforcement authorities. Such cases may involve:

• fraud;
• corruption;
• money laundering; and
• property misappropriation.

2.8 What specific considerations and concerns should be borne in mind in cross-border investigations?

Where an investigation is being carried out in civil proceedings and the risk of dissipation is high, speed and confidentiality are key, as there is a need to pursue and obtain relief to freeze assets, gain information and ensure the gagging of third parties involved. It is crucial to swiftly explore disclosure and other tools available to take formal action and achieve a result before the wrongdoers are put on notice. Other important considerations relate to:

• the nature of the wrongdoing;
• the jurisdictions involved and the swift connection to those;
• the implementation of privilege;
• data protection;
• international and bilateral treaties;
• the scope and nature of the involvement of the jurisdiction; and
• the identification and profiling of persons involved.

Once connections have been established between the involved jurisdictions and the framework of cooperation has been identified, it is important to consider applicable domestic laws relating to, among other things:

• the taking of evidence;
• timeframes in taking actions;
• the deployment of experts where necessary; and
• the building of an overall strategy.

A common challenge in cross-border investigations is the maintenance of good coordination between the various jurisdictions involved.

3 Criminal

3.1 Asset tracing: (a) What different sources of information can be drawn upon in an asset recovery investigation (eg, public information; government agency information; company information); and what restrictions and requirements apply in this regard? (b) What investigative techniques can be used to gather evidence in your jurisdiction; and what restrictions and requirements apply in this regard? (c) What other considerations and concerns should be borne in mind at this stage of the process?

(a) What different sources of information can be drawn upon in an asset recovery investigation (eg, public information; government agency information; company information); and what restrictions and requirements apply in this regard?

In Cyprus, various sources of information can be utilised in asset recovery investigations. Access to these are subject to constraints and/or requirements which may differ between public and private prosecutions. The main agencies carrying out investigations to recover crime proceeds are the Cyprus Police and the Financial Intelligence Unit of Cyprus. Government agencies may share information on a voluntary basis with bodies conducting criminal investigations.

Sources of information include the following:

• The Archive of the Registrar of Companies operates as a database of all Cyprus based companies and partnerships. The register is publicly accessible and contains information about a company's:
• • current and historic standing;
  • registered address;
  • directors;
  • shareholders;
  • charges; and
  • annual accounts.
• The Ultimate Beneficial Owners Register contains information about beneficial owners of:
• • companies registered in Cyprus;
  • European public limited liability companies; and
  • partnerships.
• Such information includes:
• • personal information such as names, nationalities and identification documents;
  • the nature of the beneficial ownership; and
  • any changes to the beneficial ownership.
• This register is not publicly accessible and access is currently allowed to competent and supervisory authorities as well as obliged entities in the context of conducting due diligence processes.
• The Land Registry, operated by the Ministry of the Interior, Department of Lands and Surveys, contains information about immovable property and property ownership in Cyprus. This register is not publicly accessible and only interested parties can request information on property in which they have a legitimate interest. Information is provided in the form of a 'search certificate' which is issued once an application has been filed and the prescribed fee has been paid.
• The Central Depository of the Cyprus Stock Exchange is confidential and no information is disclosed except to the extent that this is obligatory by law or a court order
• Other sources of information include:
• • the Register of the Road Transport Department;
  • the Cyprus Ships Register, operated by the Department of Merchant Shipping;
  • the Cyprus Aircraft Register, operated by the Department of Civil Aviation; and
  • the IP Department of the Companies Registry.

(b) What investigative techniques can be used to gather evidence in your jurisdiction; and what restrictions and requirements apply in this regard?

The key investigative techniques in the jurisdiction include the following:

• Police officers may:
• • investigate the commission of any offence; and
  • require any person that they have reason to suppose to be acquainted with the facts of the offence to attend an examination by the investigating officer.
• Failure to comply is an offence.
• Persons may be compelled by written notice to produce documents. Failure to comply is an offence.
• The police may resort to the criminal court with an ex parte application seeking disclosure orders for specific evidence such as contact details.
• Under the Retention of Telecommunication Data for the Purpose of Investigation of Serious Criminal Offences Laws of 2007, telecommunications providers must store data for a period of six months for the purposes of the identification of subscribers and users. The purpose is to make data available to the police following a court order.
• The police may proceed with an arrest and search of the arrested person. Under the criminal procedure law, to search a person mandates a warrant. If the police has reason to believe that the person to be arrested has entered into any place, persons in charge of that place must grant free ingress to the person with authority to arrest. Also, the Criminal Court may issue a warrant for the arrest of any person in all cases where it is deemed necessary.
• Investigations are also aided by the Cyprus Financial Intelligence Unit (MOKAS), whose primary role is to receive, evaluate and analyse reports on suspicious transactions and other information submitted by obliged entities and the dissemination of the results to the police, the central investigative authority.
• In gathering evidence, law enforcement authorities and MOKAS may cooperate with:
• • the Customs Department;
  • the Ministry of Justice and Public Order;
  • the Ministry of Finance;
  • the Registrar of Companies and Official Receiver;
  • the Tax Department; and
  • supervisory authorities including:
  • • the Central Bank of Cyprus;
    • the Cyprus Securities and Exchange Commission;
    • the National Betting Authority;
    • the National Gaming and Casino Supervision Authority;
    • the commissioners of taxation;
    • the Superintended of insurance;
    • the Council of the Institute of Certified Public Accountants of Cyprus; and
    • the Council of the Cyprus Bar Association.

(c) What other considerations and concerns should be borne in mind at this stage of the process?

Key considerations including the following:

• All investigative techniques – including arrest, search and entry into private property – are subject to the Constitution and the European Convention for the Protection of Human Rights.
• There must be compelling evidence to support any application by the police to the Criminal Court for disclosure.
• Under criminal procedure law, the accused retains the right to access copies of all statements and documents to be put in evidence obtained by the police during their investigations.
• It is important to comply with data protection laws and regulations.
• IP addresses are not captured by the Retention of Telecommunication Data for the Purpose of Investigation of Serious Criminal Offences Laws of 2007.
• Asset tracing in Cyprus often involves cross-border issues, which may necessitate the navigation of international tools to obtain and give foreign assistance.

3.2 Confiscation: (a) What confiscation mechanisms are available in your jurisdiction? (b) How do these different mechanisms work in practice? (c) Are any procedural tools available in your jurisdiction that can enhance the effectiveness of the confiscation regime or capture a wider range of assets? (d) Can secondary proceeds be confiscated in your jurisdiction? (e) Is value-based confiscation allowed in your jurisdiction? If so, how does this work in practice? (f) Can the property of third parties or close relatives be confiscated in your jurisdiction? How are third-party interests addressed? (g) Can confiscated assets be used to provide restitution to the victims of crime? (h) Can confiscated assets be used to satisfy civil claims for damages or compensation arising from the offence? (i) Is confiscation possible without a conviction in your jurisdiction? If so, how does this work in practice?

(a) What confiscation mechanisms are available in your jurisdiction?

The main mechanism for confiscation is prescribed in the Prevention and Combating of Money Laundering Law (188(I)/2007), according to which confiscation "signifies the definitive deprivation of property ordered by a criminal court in relation to a criminal offence".

After conviction and before sentencing, and upon the criminal court's determination that there are proceeds of crime, the attorney general initiates a confiscation procedure. A confiscation order is issued in the form of a decree against the accused to pay a certain amount of money (in personam).

Moreover, the criminal court has the power, either before or after issuing a confiscation order, to order the freezing of assets, which prohibits the transfer, transformation, destruction, moving or disposal of property that could be subject to confiscation or used as evidence. The order can bind all realisable property, including property transferred after it is issued. If a confiscation order is issued, the freezing order is lifted only after:

• full payment has been made; and
• the assets caught by it are managed according to the provisions of the law.

Similarly, the criminal court has the power to issue charging orders upon interest in property such as:

• immovable property;
• government bonds;
• dividends;
• shares of companies registered in Cyprus; and
• interest under a trust.

The Criminal Court may issue special freezing orders against the property of:

• a suspect residing outside the jurisdiction; or
• a deceased person.

Lastly, the relevant law provides for the recognition of foreign orders in the jurisdiction for enforcement purposes.

(b) How do these different mechanisms work in practice?

Under the Prevention and Combating of Money Laundering Law, after conviction and before sentencing, the Criminal Court will inquire whether the accused has acquired any proceeds from the commission of illegal activities or a money laundering offence. To do so, a summary inquiry is conducted upon the application of the attorney general, as follows:

• The Criminal Court calls the accused to give particulars of any matter relevant to imposition of penalties, including his or her financial position and that of his or her family.
• The accused is examined by the prosecution and further witnesses may be called to adduce evidence in support and against the allegations.
• If the accused fails to give sufficient evidence on the manner in which he or she acquired assets, the Criminal Court may assume, among other things, that:
• • any property acquired in the last six years prior to the initiation of criminal proceedings was acquired with proceeds from the commission of a predicate offence; and
  • any property of his or her family which was given and which was transferred in the past six years prior to the initiation of criminal proceedings was the subject of a gift which was made by the accused for the purpose of avoiding the consequences of the law.

Once the Criminal Court determines that the accused has benefited from the commission of a predicate offence, it may impose a pecuniary penalty without prejudice to the power of the criminal court to impose any other additional penalty, assessing the benefit that the accused has made from the commission of the offence.

The law itself clarifies that:

• the consequences of a confiscation order are same as those of imposing a monetary penalty; and
• freezing orders are subject to the seizure of assets based on any Criminal Court instructions according to the asset itself. If the Criminal Court finds that the realisable property of the accused is less than the calculated proceeds from the commission of illegal activities, the total amount to be confiscated equates to the accused's realisable assets.

In terms of executing foreign decrees, the key steps of the procedure are as follows:

• The foreign country submits a request to the Ministry of Justice and Public Order.
• The request is assessed by the Ministry of Justice and, if it satisfies the requirements of the relevant law, is transmitted it to the Cyprus Financial Intelligence Unit (MOKAS).
• MOKAS then files an ex parte application with the Criminal Court.
• The Criminal Court examines the conditions set by the relevant law and, if they are satisfied, it issues a decree of enforceability of the foreign order. The relevant law provides for an exhaustive list of grounds upon which recognition of a foreign order may be refused, such as whether:
• • the foreign order is in force at the time of recognition; and
  • the accused was properly notified in the foreign proceedings if the order was issued in his or her absence.
• Once the enforceability decree is issued, notice will be given to affected persons,
• A foreign order recognised in the jurisdiction will have the same effect as an order issued by a Cypriot court.

(c) Are any procedural tools available in your jurisdiction that can enhance the effectiveness of the confiscation regime or capture a wider range of assets?

The Prevention and Combating of Money Laundering Law (188(I)/2007) provides the possibility for:

• the issuance of a freezing order, either before or after issuing a confiscation order, which prohibits the transfer, transformation, destruction, moving or disposal of property that could be subject to confiscation or used as evidence. The order can bind all realisable property, including property transferred after it is issued. If a confiscation order is issued, the freezing order will be lifted only after:
• • full payment has been made; and
  • the assets caught by it are managed according to the provisions of the law;
• the issuance of charging orders upon interest in property such as:
• • immovable property;
  • government bonds;
  • dividends;
  • shares of companies registered in Cyprus; and
  • interest under a trust;
• the issuance of special freezing orders against the property of a suspect residing outside the jurisdiction or a deceased person;
• the variation and annulment of freezing and charging orders;
• the appointment of a receiver after the issuance of a confiscation order for which no appeal was filed. A receiver may be appointed to:
• • liquidate the property;
  • take possession of the proceeds for the purposes at the liquidation;
  • enforce charges; and
  • order any person having an interest in the realisable property to pay the receiver;
• the issuance of an order for the sale of bonds; and
• the disposal of proceeds from the realisation of property.

(d) Can secondary proceeds be confiscated in your jurisdiction?

Given that confiscation orders are in personam and calculated upon a value-based system, it is possible to confiscate secondary proceeds. Identifying the assets and valuing them is relevant to the extent that the court must calculate the amount of the confiscation order, but this does not require a direct link between the realisable asset and the illicit activity. Under the relevant law, reinvestment and proceed conversion are considered in calculating the value of the benefit gained by the accused by effect of the illicit acts committed.

(e) Is value-based confiscation allowed in your jurisdiction? If so, how does this work in practice?

Yes, the confiscation regime is a value-based system and in personam orders and thus do not relate to specific assets. Assets subject to confiscation may be located within or outside the jurisdiction and may be directly or indirectly owned by the accused. The Criminal Court:

• assesses and calculates the value of the benefits received by the accused or by another person from illicit activity; and
• issues an order for the confiscation of the equivalent amount.

Under the relevant law, the amount that may be realised at the time a confiscation order is made:

• is made up of the total value of all realisable property held by the accused, plus the total value of prohibited gifts and transfers; and
• excludes the total of certain obligations such as the payment of pecuniary penalties imposed prior to the confiscation order and other preferential debts.

(f) Can the property of third parties or close relatives be confiscated in your jurisdiction? How are third-party interests addressed?

Yes, it is possible to confiscate property of the accused held by third parties or family members where the asset was unlawfully transferred to them.

Under the relevant law, realisable property may include:

• any property held by another person to whom the accused has directly or indirectly made a gift prohibited by the relevant law;
• property held by another person to whom the accused has directly or indirectly made a prohibited transfer of property, whether situated in Cyprus or abroad;
• interests or rights over property held by third parties; and
• direct or indirect transfer or transport of the proceeds from the accused to another person, where the other person knows or ought to know that the purpose of the transfer or the transfer is to avoid confiscation. This is inferred from specific facts and circumstances, including transfers with no or substantially lower consideration.

This evidence may surface in the context of a summary inquiry – that is, an examination of the financial status of the accused by the court. Under the relevant law, there is a rebuttable presumption that if the accused fails to give sufficient evidence on the manner in which his or her family acquired certain assets during a six-year period prior to the instigation of proceedings against the accused, those assets will be considered to be the subject of a gift which was made by the accused for the purpose of avoiding the consequences of the law.

Irrespective of the above, the law specifically provides that the rights of bona fide third parties are preserved. Importantly, the rights of interested parties and bona fide third parties stand as one of the grounds against the enforcement of a confiscation order.

(g) Can confiscated assets be used to provide restitution to the victims of crime?

Yes, under the relevant law, a sum of money or a confiscated property or a sum of money levied on the enforcement of a confiscation order may be refunded to the victim of the criminal offence giving rise to the confiscation order. Also, in the context of recognising foreign orders, the law provides for the recognition of restitution orders to the legitimate owners or victims. Specifically, upon the request of the competent authorities of the foreign country, a sum of money confiscated or collected on the enforcement of a confiscation order may be repaid to its legal beneficiary or to the victim of the criminal offence in respect of which the confiscation order was issued, as agreed between the competent authorities of the foreign country and Cyprus.

(h) Can confiscated assets be used to satisfy civil claims for damages or compensation arising from the offence?

It is not generally permissible to use confiscated assets against civil damages or compensation arising from the offence. The nature of a confiscation order is directed towards the reversal of the benefit gained by the accused by effect of the illicit acts committed; but the issuance of a confiscation order does not preclude the victim or the complainant from seeking compensation for its claims through civil action against that person. However, the existence of civil claims may act as an obstacle as the attorney general may not seek a confiscation order if satisfied that the victim has already resorted to the civil courts to recover the loss suffered by the commission of the relevant offences. In the same vein:

• the commencement of civil proceedings may act as a ground against enforcement of the confiscation order; and
• the attorney general may apply to the Criminal Court to have the confiscation or charging order set aside.

(i) Is confiscation possible without a conviction in your jurisdiction? If so, how does this work in practice?

Under the relevant law, under certain conditions and upon an application made by the attorney general, it is possible to make a confiscation order of property against a suspect who is outside the jurisdiction of Cyprus or has died. If the suspect is subsequently put on trial for the same offence and is acquitted, the court which acquits the accused will set aside the confiscation order.

3.3 Repatriation: (a) What provisions (if any) govern the repatriation of assets in your jurisdiction? What specific considerations and concerns should be borne in mind in this regard?

(a) What provisions (if any) govern the repatriation of assets in your jurisdiction? What specific considerations and concerns should be borne in mind in this regard?

Under domestic law, assets subject to confiscation may be located within or outside the jurisdiction. Execution of confiscation orders upon assets located abroad is primarily performed through the mechanisms inscribed in the international legal framework for mutual legal assistance. Under the relevant domestic law, confiscation orders relating to property located abroad are sent by the Cyprus Financial Intelligence Unit (MOKAS), through the Ministry of Justice of Cyprus, for execution and service to the competent authorities of the country in which the assets are located.

Indicatively, Cyprus is bound by EU Regulation 2018/1805 on the mutual recognition of freezing orders and confiscation orders which provides for the execution of confiscation orders upon assets located in member states. Under the directive, member states issue confiscation certificates, which are then transmitted to the relevant jurisdiction for execution.

Cyprus has also ratified the United Nations Convention against Corruption – a legal instrument that requires member states to return assets which are specifically the product of corruption to their country of origin. One key consideration in relation to the repatriation of assets on the basis of the United Nations Convention against Corruption is that repatriation is possible only if specific conditions are met, such as that the confiscation order must:

• identify assets that are the product of embezzled funds; or
• otherwise establish the ownership of the country of origin upon them.

4 Trends and Predictions

4.1 How would you describe the current asset recovery landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Overall, the asset recovery landscape in Cyprus is evolving into a more dynamic system, marked by increased international cooperation and legislative reforms aimed overcoming jurisdictional barriers. The radical changes effected during the past year, such as the newly adopted Civil Procedure Rules and the amendment of Article 32 of the Courts Law, are aimed at:

• harmonising the Cypriot legal system with modern commercial and financial practices; and
• addressing the need of the courts to provide effective remedies.

A new Commercial Court is expected to be established within the next months which will consist of judges with extensive experience in commercial disputes. The Commercial Court will have jurisdiction to determine commercial disputes where the value of the dispute exceeds €2 million.

5 Tips and Traps

5.1 What would be your recommendations for effective asset tracing and recovery and what potential pitfalls would you highlight?

In appropriate cases, such as those involving fraud, it is recommended to seek a number of different types of injunctive relief as part of an effective scheme of asset tracing and subsequent enforcement. The Cyprus courts will take a pragmatic approach and may grant several different types of injunctive relief as a package, depending on:

• the facts of each case; and
• the risk of dissipation.

For example, in a case in which there is a real risk of dissipation of assets and concrete evidence of attempted concealment, a court may issue freezing injunctions against the defendants coupled with, among other things:

• an order for disclosure of their assets;
• a Norwich Pharmacal order for discovery; and
• preservation orders against banks (to which the assets in question have allegedly been transferred).

Where there is a real risk of dissipation of assets and therefore reasonable grounds to argue that the judgment creditor will be unable to enforce a future judgment against the judgment debtor, the judgment creditor will need to act promptly and without undue delay in applying for a freezing order or any other relevant injunctive relief. Where there is unjustified delay in pursuing an injunctive remedy, arguments for risk of dissipation carry less weight and ex parte applications for injunctive relief are doomed to be dismissed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.