On December 19, 2017, the European Commission published an amendment to the 4th Anti-Money Laundering Directive (2015/849). The 4th Anti-Money Laundering Directive contains rules on the UBO register. These rules must then be transposed into national legislation (see our memorandum of July 2016). The Directive had to be transposed into national legislation no later than June 26,2017, but that did not happen on time. A proposal for consultation was however presented on March 31, 2017, and gave an indication of what the UBO register will look like, but much remains unclear, because crucial elements still have to be worked out in an Order in Council (algemene maatregel van bestuur) (see our memorandum of April 2017). The UBO register is expected to be transposed into legislation before the summer of 2018.
What we already know
In short, the proposal for consultation states that the data on the ultimate beneficial owners of a business or legal entity (hereinafter: UBOs) must be included in the Trade Register. It is generally accepted that a UBO is a party with an interest of more than 25% in a qualifying legal entity or business. This could be a private limited liability company (BV) or a public limited company (NV) established in the Netherlands for example. Mutual funds (fondsen voor gemene rekening) could possibly also fall within the scope of the UBO register; the Minister of Finance indicated as much in September 2017. Entities incorporated under the laws of a non-EU country will, in the meantime, apparently fall outside the scope of the UBO register. The following UBO information must, in any case, be registered:
- month and year of birth;
- country of residence;
- nature and extent of the economic interest held by the UBO.
In addition, the date of birth and the birthplace, the country of birth and the tax identification number will have to be registered. This additional information will only be provided to certain authorities and the Financial Intelligence Unit. The information can also be exchanged between competent authorities of the Member States (for example, tax authorities). Other interested parties will only have restricted access to the information. There will be exceptions for minors and for situations where there is a danger of kidnapping, threats, intimidation, etc.
What is new?
The pending amendment further extends the rules for the UBO register. For example, the UBO register for businesses and legal entities that operate in the European Union will be publicly accessible; the requirement of a ‘legitimate interest’ to gain access to the register is no longer stipulated. The national registers will also be better aligned with the registers of other Member States in order to increase cooperation between the authorities of the various Member States. The UBO register for trusts will only be accessible to people with a legitimate interest. Information about bank accounts, safe deposit boxes and property ownership will be registered, but will only be accessible to authorities. The explanatory notes to the pending amendment show that the European Commission wants to reduce the UBO percentage to 10% for situations where the risk of use for illegal purposes is high (passive non-financial entities).
The Council and the European Parliament will have to approve the amendment. It is expected that the more stringent rules will start applying to the UBO register for businesses and legal entities at the end of 2019. The more stringent rules for the UBO register for trusts will presumably apply as of 2020. For the sake of clarity we would like to point out that the above only applies to the more stringent rules contained in the amendment. The UBO register itself, excluding the more stringent rules, will take effect sooner. We expect that the UBO register will be a fact before the summer of 2018. We will update you on new developments as soon as they arise. If you wish to contact us sooner, please feel free to do so.