Complying with EU ultimate beneficial owner registers
In previous news updates we have informed you about the introduction of ultimate beneficial owner (UBO) registers across EU member states. These registers were mandated by the 4th EU Anti-Money Laundering Directive. EU directives only provide a framework and mandated targets for implementation by member states, which gives countries considerable flexibility.
However, this also means that implementation is inconsistent, which creates compliance issues for multinationals with subsidiaries across the 28 member states. The Citco GSGS team guides clients through the implementation process and maps the various local requirements. Below is a quick overview of some of the key differences between states:
- Deadlines: only a few countries have met the deadline for integrating the UBO register into their laws by the end of June 2017. These are: Denmark, France, Germany, Sweden and the United Kingdom (which was the first to adopt by introducing a register of People with Significant Control (PSC), as previously reported). Belgium, Ireland, Luxembourg and The Netherlands are expected to introduce UBO registers before year end, but other countries may need more time.
- Thresholds: for the purposes of the UBO registration, a corporate entity typically needs to be disclosed in case it has an ownership interest of more than 25%, or exercises sufficient control via other means, such as voting power of contractual arrangements. However, some countries have adopted a lower threshold for disclosure, which the directive allows.
- Type of disclosure: Denmark, Finland, Sweden and the United Kingdom have all opted for a public UBO register. Even in member states where the register is not publicly available, a party who can demonstrate a “legitimate” interest may obtain information. The definition of “legitimate interest” differs per jurisdiction but at a minimum includes government enforcement agencies and the widest interpretation may extend to journalists.
- Penalties: member states have introduced a wide range of penalties for non-compliance, from an administrative fine of around €1,300 (in proposed legislation in Italy and Lithuania) to 10% of annual turnover, with a minimum of €5 million (in the proposed Luxembourg legislation). The United Kingdom considers willful non-compliance a criminal offence (which may result in a 2-year prison sentence).
We will keep you updated as member states implement UBO registration regimes in their legislation.