On May 20, 2015 the European Parliament approved the proposal for a 4th Anti-Money Laundering Directive. This directive will replace the 3rd Anti-Money Laundering Directive. The Anti-Money Laundering Directives are aimed at combating money laundering and the financing of terrorism. One of the ways this is achieved is by requiring banks and other financial institutions, and the practitioners of certain professions to verify the identity of their clients and the ultimate beneficiaries of these clients. An important new feature of the 4th Anti-Money Laundering Directive is the requirement for all EU Member States to maintain a register containing information about the Ultimate Beneficial Owners (UBOs) of legal entities that are incorporated under the laws of the particular Member State.
The UBO register
The new provisions oblige legal entities to maintain adequate, accurate and up-to-date information on their UBOs. This information will be recorded in a central register in the Member State of incorporation. A UBO is the person who holds the ultimate interest in or exercises the ultimate control of the legal entity. In general, persons with an ultimate interest of more than 25% in a legal entity qualify as a UBO. The register will include at least the following information about a UBO:
- month and year of birth;
- country of residence;
- type and size of the interest.
Access to the UBO Register
Certain government bodies and businesses that are required to verify the identity of their clients’ UBOs, such as banks, insurance companies, accountancy and tax advisory firms and real estate agents, will be able to access the information on the UBOs. Other interested parties, including members of the public and journalists, will have to prove that they have a legitimate interest in inspecting the register. It is not yet clear what qualifies as a legitimate interest.
In exceptional, individual cases Member States can restrict access to the register if there is a risk of fraud, kidnapping, violence, intimidation or extortion, or if the UBO is a minor or incapable of giving consent. The burden of proof rests on the person who wishes to invoke this exception.
The Netherlands must introduce national rules for the introduction of a UBO register within two years after publication in the Official Journal of the European Union. Minister Dijsselbloem has informed the Lower House that he will adhere to this deadline and that he expects the UBO register to be introduced in the summer of 2017.
Commentary by Meijburg & Co
Meijburg & Co obviously endorses the importance of combating money laundering and the financing of terrorism. The transparency of financial data is a necessary tool in this. However, it is also clear that the UBO register can have a significant impact on the privacy of shareholders/major shareholders in businesses and family businesses. It is of the utmost importance that the transposition of the directive into Dutch law takes account of this right to privacy as much as possible, for example, by maintaining a strict and narrow definition of ‘legitimate interest’. We will follow further developments closely and would be pleased to advise you on the possibilities of protecting sensitive personal information.