Post by Sapphire Capital on Jun 11, 2015 7:02:13 GMT 4
On 20 May 2015, the European Parliament increased the hunt for tax evaders, money launderers and terror financiers by adopting the fourth instalment of the Anti-Money Laundering Directive (“AMLD”). The main novelty of the new directive is the introduction of a central UBO-register, a public register which identifies the ultimate beneficial owners (“UBO’s”) of companies and trusts.
Under the previous version of the AMLD, which was adopted in 2005 and transposed into EU Member States’ legislation in 2007, financial institutions, lawyers, notaries and accountants were already obliged to verify who the ultimate beneficial owners of their customers were, but the new directive clearly goes beyond the one it replaces by obliging EU Member States to obtain and hold information on the UBO’s of both companies and trusts.
Member States now have two years to put in place an adequate, accurate and current UBO-register which identifies the beneficial owners of corporate entities established within their territory. A beneficial owner means any natural person who ultimately owns or controls the corporate entity through direct or indirect ownership or control over 25% of the shares or voting rights.
The UBO-register will be accessible for:
competent authorities (such as tax administrations and national banks) and EU Intelligence Units, without any restriction;
so-called “obliged entities” (notaries, lawyers, banks, … whilst performing their customer due diligence duties); and
the public.
The public (any person or organization) can access the UBO-register if they are able to demonstrate a “legitimate interest”. For example a plaintiff in a legal procedure could be able to access the UBO-register in case it seeks evidence of fraud or corruption.
Since tax evaders, money launderers and terror financiers often hide behind trusts and comparable setups, their UBO’s must also be recorded in a separate “fiscal register”, but only if the trust concerned generates tax consequences. The identity of the settlor, trustee(s), the protector (if relevant), of the beneficiaries or class of beneficiaries, and of any other natural person exercising effective control over the trust must also be included in the register. The register will only be accessible to competent authorities, EU Intelligence Units and obliged entities.
Unlike in many other countries, shareholding in Belgian companies is not public. It is yet to be seen whether the introduction of a central UBO-register will change a great deal in Belgium, since a legitimate interest is required to access the register and Member States are able to deny access to the UBO-register in exceptional circumstances. Details on how the system will be implemented in Belgium are not yet available at this stage. Whether an actual public shareholders’ register will be put in place – as was recently the case in Denmark or The Netherlands - is unclear. It may be that the UBO-register will be linked to the Register of Legal Persons of the Official Belgian State Gazette or the Crossroad Bank for Enterprises and that those who want to access it will have to register online and pay a fee.
In times of international terrorism and widespread tax evasion, the UBO-register could prove to be a powerful tool to combat financial and economic crime. In implementing the system in Belgium, the legislator should however try to minimize the administrative burden and expenses, both for corporations and notaries.
Under the previous version of the AMLD, which was adopted in 2005 and transposed into EU Member States’ legislation in 2007, financial institutions, lawyers, notaries and accountants were already obliged to verify who the ultimate beneficial owners of their customers were, but the new directive clearly goes beyond the one it replaces by obliging EU Member States to obtain and hold information on the UBO’s of both companies and trusts.
Member States now have two years to put in place an adequate, accurate and current UBO-register which identifies the beneficial owners of corporate entities established within their territory. A beneficial owner means any natural person who ultimately owns or controls the corporate entity through direct or indirect ownership or control over 25% of the shares or voting rights.
The UBO-register will be accessible for:
competent authorities (such as tax administrations and national banks) and EU Intelligence Units, without any restriction;
so-called “obliged entities” (notaries, lawyers, banks, … whilst performing their customer due diligence duties); and
the public.
The public (any person or organization) can access the UBO-register if they are able to demonstrate a “legitimate interest”. For example a plaintiff in a legal procedure could be able to access the UBO-register in case it seeks evidence of fraud or corruption.
Since tax evaders, money launderers and terror financiers often hide behind trusts and comparable setups, their UBO’s must also be recorded in a separate “fiscal register”, but only if the trust concerned generates tax consequences. The identity of the settlor, trustee(s), the protector (if relevant), of the beneficiaries or class of beneficiaries, and of any other natural person exercising effective control over the trust must also be included in the register. The register will only be accessible to competent authorities, EU Intelligence Units and obliged entities.
Unlike in many other countries, shareholding in Belgian companies is not public. It is yet to be seen whether the introduction of a central UBO-register will change a great deal in Belgium, since a legitimate interest is required to access the register and Member States are able to deny access to the UBO-register in exceptional circumstances. Details on how the system will be implemented in Belgium are not yet available at this stage. Whether an actual public shareholders’ register will be put in place – as was recently the case in Denmark or The Netherlands - is unclear. It may be that the UBO-register will be linked to the Register of Legal Persons of the Official Belgian State Gazette or the Crossroad Bank for Enterprises and that those who want to access it will have to register online and pay a fee.
In times of international terrorism and widespread tax evasion, the UBO-register could prove to be a powerful tool to combat financial and economic crime. In implementing the system in Belgium, the legislator should however try to minimize the administrative burden and expenses, both for corporations and notaries.