The Register of Beneficial Ownership is a database which contains information about the ultimate beneficial owner of a company (a natural person) or a complex corporate structure.
Unlike in offshore jurisdictions, the registers of European limited liability companies are often public.
In accordance with the EU Anti-Money Laundering Directive (AML 5), European countries have successively introduced the Register of Beneficial Ownership. According to the EU Directive, a beneficial owner is a natural person who directly or indirectly manages the company and who owns more than 25% of the company. The EU reserves the right to set a lower percentage of the shares.
Should it be impossible to determine the beneficial owner on the basis of the ownership percentage of shares, the person who is holding the highest management position will be recognized as such.
The beneficial owner in trust companies, private foundations and similar structures is the founder, trustee and other persons who exercise control over this or that institution.
In addition, the EU plans to merge the Registers of Beneficial Ownership and set up an anti-money laundering program (AML). The program, which was approved by the European Parliament on July 10, 2020, provides for the unification of the European Registers of Beneficial Ownership into a single register. Companies and countries that refuse to adhere to the new guidelines, as well as countries with a high risk of money laundering, should be blacklisted. At the same time, this program implies cooperation with the organizations and countries implementing reforms to combat money laundering and terrorist financing.
The EU member states interpret anti-money laundering (AML) directives differently. Therefore, the European Union has to standardize many processes in order to prevent the possibility of money laundering by the European banking system.
British Virgin Islands
The UK government has prepared a draft directive to regulate the presentation of information in the Registers of Beneficial Ownership in overseas territories. By 2023, the Registers of Beneficial Ownership in the UK overseas territories are to be made public.
In some of the 14 areas under British sovereignty, the registers have already been introduced but have not been made public yet .
In the British Virgin Islands, the Register of Beneficial Ownership has been in operation for three years but is not publicly accessible yet. However, the search is currently carried out within the secure database called BOSS. In addition, the British Virgin Islands government has already announced that such data will soon be made public.
The Register of Beneficial Ownership has been kept in Gibraltar since 2018, but has not yet been published either.
Croatia
The Register of Beneficial Ownership was introduced in 2019. The register is kept by the Financial Agency (FINA).
The Register contains information on the ultimate beneficial owners of all legal persons registered in the Republic of Croatia in electronic form. In addition, information on the ultimate beneficial owners of trust companies and equivalent structures is also available.
Depending on the nature of the legal entity and the complexity of the ownership structure, it is necessary to enter information on the ultimate beneficial ownership in the Register, in particular information on the nature and extent of the ultimate beneficial ownership.
Cyprus
The Cypriot authorities decided at the end of January to postpone the start of the collection of information on beneficial owners to February 26, 2021 due to technical difficulties. However, the Department of Business Registration and Liquidation should have started collecting data on business owners from January 18.
The new Register will not be public because it will be introduced according to the fourth and not the fifth EU directive. Only a certain group of authorized persons will have access to it, e.g. competent authorities, representatives of MOKAS (Special Department for Combating Money Laundering), law enforcement and tax authorities. Bank institutions and registration authorities will also have access to this in order to be able to verify their customers.
It is also planned to set up a Register of Beneficial Ownership of trust companies in Cyprus. The Cypriot Securities and Exchange Commission will be responsible for this Register from March 2021.
France
The French public Register of Trust Companies has existed since 2013 and was introduced under a law aimed at combating tax fraud and serious economic and financial crime. The Register contains information that the French tax authorities receive from trust companies and trustees.
Since 2011, all trust companies where at least one of the trustees, founders or beneficiaries is taxable in France or in possession of assets located in France must file a special declaration with the French tax authorities in accordance with Article 1649 AB of the French Tax Code. This information is also included in the Register and will soon be publicly available to anyone interested in it.
Greece
The law introducing the Register of Beneficial Ownership was passed in 2018, but was then changed in 2019. With the decree of February 28, the Ministry of Finance named March 3, 2020 as the official start date of the Register.
From now on, all legal persons registered in Greece or engaged in taxable business activities will have to keep their own register. This register must contain the information on the beneficial owners. In the future, legal persons will transmit this information to the main register through a special service (GSIS).
Hungary
In Hungary, an anti-money laundering law came into force on June 26, 2017. According to this law, the deadline for the introduction of a Register of Beneficial Ownership was set on January 1, 2019. However, 20 months later the Register was not introduced and the website for it was not created.
The Hungarian government claims that there is currently no specific date when the Registers of Beneficial Ownership will be introduced. This point in time is also difficult to predict.
Counter-terrorism organizations and state security services, as well as tax authorities, will have access to information from the Register. The register of beneficial owners in Hungary will be available to a wider range of people (within the framework of cooperation in the fight against terrorism).
Italy
In Italy, a committee was set up in 2015 to develop recommendations for the implementation of the fourth EU directive. Italy has had a legislative decree since July 4th 2017 (Decreto Legislativo 90/2017). The provisions of the EU directive have thus been implemented in Italian law.
According to this law, legal persons are required to send information about their beneficial owners to the Italian Commercial Register. In addition access to this information may be given to the government agencies established by law, individuals for a fee. However, the law limits the reasons why this information can be made available to individuals. For example, the information may be presented in the following cases: when it is needed for protection in the context of the judicial process or when there are specific and documented reasons to doubt that the rightful person is the real one.
Ireland
On March 2, 2019, Irish Statutory Instrument No. 110 (SI 110) of 2019 was passed establishing a central Register of Beneficial Ownership.
SI 110 implemented requirements 4 and 5 of the EU directives on preventing the use of the financial system for the purpose of money laundering or terrorist financing in Ireland (Directive 2015/849 / EU and Directive 2018/843 / EU).
The following are recognized beneficial owners in Ireland:
- Any person who, directly or indirectly (through any other legal entity), owns more than 25% of the stocks, shares or voting rights in an Irish company
- Persons representing the top management of the company (in case no one owns more than 25% of the stocks, shares or voting rights in an Irish company or if there is any doubt that they are the beneficial owners) li >
On November 15, 2016, Ireland introduced a requirement that companies should maintain the Register of Beneficial Ownership and update the information contained therein.
The following information is provided in the register:
- First name and surname
- Date of birth
- Citizenship
- Home address
- Eligibility of ownership
- Start and end dates of ownership
Lichtenstein
On August 1, 2019, the law on the Register of Beneficial Ownership of domestic legal entities came into force in Liechtenstein.
Now fiduciary providers and other relevant individuals must provide the Department of Justice with information about the beneficial owners. The Register is kept in German and the information it contains is not publicly available.
Information will be available in the register to the following institutions:
- the authorities: Financial Market Authority (FMA)
- Staff Unit (FIU)
- Public prosecutor's office and others
- Due diligence authorities (including banks)
- To third parties on the basis of a special request
Luxembourg
Following the adoption of the fourth EU anti-money laundering directive (4AMLD) in 2017, all companies are obliged under Luxembourg law to identify the final beneficiaries and submit the relevant information to the Luxembourg Business Register (LBR).
This information is then published in the Register of Beneficial Ownership.
The Luxembourg law on the Register of Beneficial Ownership (Registre des Bénéficiaires Effectifs (RBE) lists different structures, forms and types of companies.
Both companies and partnerships are subject to this law, whether they are regulated or not. This applies to company forms such as: SA, SCA, Sàrl, SCS, SCSp, SE, SNC, GIE, SAS, SC.
The legislation also applies to mutual funds. This affects structures such as UCITS, Part II Fund, SIF, SICAR, RAIF and other types of AIF. The fund “A fonds commun de placement” (FCP) and foreign subsidiaries of trading companies and public organizations are also subject to the new law.
The following information is made available:
- First name and surname
- Date of birth
- Key figure
- Citizenship
- Country of residence
- Eligibility of ownership
Malta
On December 20, 2017, the law establishing the Register of Beneficial Ownership in accordance with EU Directive 2015/849 was published in Malta.
Every year, all companies must provide the registry administrator with information on the BO and the dates of any changes. The list of information must be signed by the director of the company or his assistant. The company, its governing bodies, shareholders and beneficial owners are responsible for compliance with the law.
Access to the Register of Beneficial Ownership in Malta is only granted to the following institutions: The Financial Intelligence Analysis Unit, the national tax authorities and other competent national authorities dealing with the prevention of money laundering or terrorist financing.
This access is unlimited and does not require registration. The Register can also be accessed by individuals or organizations who exercise the necessary security supervision with regard to money laundering or terrorist financing.
Any person or organization can access the register upon written request. However, the reason for the request must represent the interests of the state and be related to the prevention, detection and elimination of money laundering or terrorist financing.
The following information is made available to the registry:
- First name and surname
- Date of birth
- Identification number
- Citizenship
- Country of residence
- Eligibility of ownership
Netherlands
On June 23, 2020, the Dutch Parliament passed Law No. 35179 establishing a Register of Beneficial Ownership. The Netherlands should have introduced the Register of Beneficial Ownership in accordance with EU Directive 2015/849 (4AMLD) as early as 2017. However, this requirement was not met until three years later.
Some data in the Register will be publicly available. The fifth EU Anti-Money Laundering Directive (5AMLD) obliged the Netherlands and other EU countries to also introduce the Register of Beneficial Ownership of trust companies and similar structures by the end of January 2020.
According to the AML5D directive, the applicable provisions of previous EU directives regarding trust companies will be amended and expanded. For example, all types of trust companies are currently required to register information as well. In the past, this obligation only applied to express trusts.
In trust companies and foundations, there is no characteristic to designate a natural person as a beneficial owner. This means that all beneficial owners are indicated in the register, and not just those who own 25% of the shares.
Spain
The Spanish Ministry of Justice issued Regulation 319/2018 of March 21, 2018. According to this regulation, Spanish companies are obliged to disclose the ultimate beneficial owners.
In this case, beneficial owners are
- who directly and indirectly own and control more than 25% of the company's share capital
- who directly and indirectly own and control more than 25% of the voting rights of the company
- who otherwise exercise direct or indirect control over the management of the company
Only listed companies are exempt from this obligation. In addition, companies with indirect beneficial owners must disclose information about legal entities that intervene in the control chain of the Spanish company.
If the company has no direct or indirect beneficial owners, the members of its management body must be specified in the declaration. If there are any changes with regard to the beneficial owners who have already been identified, such a declaration must be submitted again.
Sweden
On August 1, 2017, a new law came into force in Sweden. Under this law, natural persons are currently required to provide the Swedish Business Registration Service (Bolagsverket) with information about their beneficial owners. The fourth EU directive on combating money laundering has thus been implemented.
The obligation to register beneficial ownership applies to the following persons:
- Swedish legal persons
- foreign legal entities operating in Sweden
- natural persons residing in Sweden who manage trust companies or similar structures
The following persons and institutions are exempt from this obligation:
- Government, district councils and municipalities, and legal entities under their control
- Restricted companies (limited liability companies) with voting shares admitted to trading on a regulated market in the EEA or an equivalent market outside the EEA
- Property of deceased and liquidators
United Kingdom
As early as June 25, 2014, a law was passed in the United Kingdom which provided for the introduction of an open Register of Beneficial Ownership (PSC - Register of People with Significant Control) in the United Kingdom. The main differentiator of the UK register is its transparency. Anyone interested can find the information they need in the register. Exceptionally, some information may be hidden if there is a serious threat to life or the likelihood of violence.
Entrepreneurs wishing to do business in the UK must also follow the above law. The following forms of ownership fall under the law:
- Public companies
- English LLPs (Limited Liability Partnerships)
- Scottish SLPs (Scottish Limited Partnerships)
- Limited Liability Companies
- EU companies
The only exception is LP (Limited Partnership).
The following information about the individuals is disclosed:
- First name and surname
- Month and year of birth
- Citizenship
- Country of residence
- Address for sending correspondence
- Start date of the inspection
- Reason for inspection
Conclusion
In general, European jurisdictions are closely aligned with EU directive AMLD 4/5.
At the same time, however, many European countries have tried to some extent to restrict the access to the information contained in the register.
Such an approach appears to be well balanced. On the one hand, it enables the competent state authorities to obtain information that may be useful for investigations and, on the other hand, guarantees the confidentiality of information about the beneficial owners. However, people can try dishonestly to gain access to information in the registry. This poses additional threats to beneficial owners.
Not only in Europe, but also in Asian countries and some island regions, attempts are being made to make corporate structures more transparent. Therefore, the current issue is the formation of a new sustainable direction for the development of corporate laws and tax planning.
Russia
On December 21, 2016, amendments to the Federal Law of 07.08.2001 No. 115-FZ "About combatting the legalization of income generated by criminals (money laundering) and to finance terrorism" came into force in Russia. They represent an obligation to disclose information about their beneficial owners (Art. 6.1).
A beneficial owner is a natural person who ultimately directly or indirectly (through a third party) owns a legal person (with a predominant stake of more than 25 percent in the capital) or regulates the actions of this legal person (Article 6 Paragraph 1 of Federal Law No. 115 -FZ).
As of December 21, 2016, a legal person is required to have information about their beneficial owners and to take all reasonable and feasible steps to identify the beneficial owners.
The legal person must have the following information on the beneficial owner:
- First and last name, additionally father's name (if available)
- Citizenship
- Date of birth
- Data on the passport
- Data of a migration card (a migration card is a document confirming the right of a foreign citizen or stateless person to stay (reside) in the Russian Federation)
- Address of the place of residence (registration) or the place of stay
- Tax identification number (if available)
