New gold digging area for criminals | the European registers on beneficial ownership | AMLD4

A lovely amount of new bureaucracy is introduced by the proposal for the fourth European anti-money laundering directive, “AMLD4”. I fear the AML bureaucracy will cost integer people and companies a lot of money and will not be effective.

Most important in the AMLD4 proposal is the introduction of the new beneficial ownership regulations in articles 29 and 30 of the proposal:

(a) an obligation for all corporate and other legal entities incorporated in the EU to obtain and hold adequate, accurate and current information on their beneficial ownership, including the details of the beneficial interests held; a similar obligation for trustees of any express trust;
(b) a central register in each Member State that registers the information on beneficial ownership and that in the case of corporate and other legal entities may be accessed by [i] all companies that have anti-money laundering (“AML”) obligations, the so called ‘obliged entities’, [ii] any persons or organisations that can demonstrate a legitimate interest. In the Netherlands the central register will be held by the Chamber of Commerce.

Companies with AML-obligations (‘obliged entities’) that will have access to the central registers

The group of companies that have AML-obligations is very large; according to the proposal they will all have access to the central register. This group not only comprises regulated activities like credit institutions, insurance companies, attorneys (advocaten) and notaries, but also estate agents, companies trading in goods (provided there are cash payments of EUR 10 000 or more) and providers of gambling services. Below you find the full list of companies with European AML-obligations.

Privacy and sucurity of those registered

Practically this means that the information regarding the beneficial owners will be easily accessed by a large group of people. It might mean that the information is practically public, even though the proposal contains data protection regulations.

According to the proposal in exceptional circumstances an exemption to the access to the beneficial ownership information is possible on a case-by-case basis, if the access of information would expose the beneficial owner to the risk of fraud, kidnapping, blackmail, violence or intimidation or if the beneficial owner is a minor or otherwise incapable.

I think it is naïve to think that an agreement with a company or person asking for access to the register will be enough to protect the privacy and security of the persons registered. Access to the register should only be granted to persons that are checked on integrity and have no criminal antecedents. Otherwise the central registers will become a gold digging area for criminals.

 

More information

Article 2, subparagraph 1, of the AMLD4 proposal, the ‘obliged entities’

1. This Directive shall apply to the following obliged entities:

(1) credit institutions;

(2) financial institutions;

(3) the following natural or legal persons acting in the exercise of their professional activities:

(a) auditors, external accountants and tax advisors;

(b) notaries and other independent legal professionals, when they participate, whether by acting on behalf of and for their client in any financial or real estate transaction, or by assisting in the planning or execution of transactions for their client concerning the:

(i) buying and selling of real property or business entities;
(ii) managing of client money, securities or other assets;
(iii) opening or management of bank, savings or securities accounts;
(iv) organisation of contributions necessary for the creation, operation or management of
companies;
( v) creation, operation or management of trusts, companies, foundations, or similar structures;

(c) trust or company service providers not already covered under points (a) or (b);

(d) estate agents;

(e) other natural or legal persons trading in goods, only to the extent that payments are made or received in cash in an amount of EUR 10 000 or more, whether the transaction is executed in a single operation or in several operations which appear to be linked;

(f) providers of gambling services.

With the exception of casinos and following an appropriate risk assessment, Member States may decide to exempt fully or in part providers of certain gambling services from national provisions transposing the provisions of this Directive on the basis of the proven low risk posed by the nature and, where appropriate, the scale of operations of such services. Among the factors considered in their risk assessment, Member States have to assess the degree of vulnerability of the applicable transactions, including with respect to the payment methods used. (…)

Article 29 and 30 of the AMLD4 proposal, new beneficial ownership regulations

Article 29
1. Member States shall ensure that corporate and other legal entities incorporated within their territory are required to obtain and hold adequate, accurate and current information on their beneficial ownership, including the details of the beneficial interests held. Member States shall ensure that these entities are required to provide, in addition to information about their legal owner, information on the beneficial owner to obliged entities when the obliged entities are taking customer due diligence measures in accordance with Chapter II.
2. Member States shall require that the information referred to in paragraph 1 can be accessed in a timely manner by competent authorities and FIUs.
3. Member States shall ensure that the information on beneficial ownership is held in a central register in each Member State, for example a commercial register, companies register as referred to in article 3 of the Directive 2009/101/EC of the European Parliament and of the Council [27], or a public register. Member States shall notify to the Commission the characteristics of these national mechanisms. The information on beneficial ownership contained in this database may be collected in accordance with national systems.
4. Member States shall require that the information held in the central register referred to in paragraph 3 is adequate, accurate and current. 5. Member States shall ensure that the information on the beneficial ownership is accessible in all cases:

a) to competent authorities and FIUs, without any restriction;
b) to obliged entities, in the framework of the conduct of customer due diligence in accordance with Chapter II.
c) to any persons or organisations that can demonstrate a legitimate interest. These persons or organisations shall access at least the following information on the beneficial owner:

i) name;
ii) month and year of birth;
iii) nationality;
iv) country of residence;
v) nature and extent of beneficial interest held.

For the purpose of this paragraph, access to the information on beneficial ownership shall be in accordance with data protection rules and may be subject to online registration and to the payment of a fee. The fees charged for obtaining the information shall not exceed the administrative costs thereof.

6. The central register shall ensure timely and unrestricted access by competent authorities and FIUs, without alerting the entity concerned. It shall also allow timely access by obliged entities.
7. Member States shall ensure that competent authorities and FIUs are able to provide the information referred to in paragraph 1 and 3 to the competent authorities and FIUs of other Member States in a timely manner.
8. Member States shall require that obliged entities do not rely exclusively on the central register referred to in paragraph 3 to fulfil their customer due diligence obligations laid down in this Directive. Those obligations shall be fulfilled by using a risk-based approach.
9. Member States may provide for an exemption to the access to all or part of the beneficial ownership information as provided for under para. 5.b) and c) of this Article on a case-by-case basis in exceptional circumstances, if this would expose the beneficial owner to the risk of fraud, kidnapping, blackmail, violence or intimidation or if the beneficial owner is a minor or otherwise incapable. Exemptions granted pursuant to this paragraph shall not apply to the obliged entities referred to in article 2(1)(1) and (2) and to those referred to in article 2(1)(3)(b) when they are public officials.
10. Within four years after the date of entry into force of this Directive, the Commission shall submit a report to the European Parliament and the Council assessing the conditions and the technical specifications and procedures for ensuring safe and efficient interconnection of the central registers via the European central platform established in Article 4a of Directive 2009/101/EC. Where appropriate, the report shall be accompanied by a legislative proposal.

Article 30
Member States shall require that trustees of any express trust governed under their law obtain and hold adequate, accurate and current information on beneficial ownership regarding the trust. This information shall include the identity of the settlor, the trustee(s), the protector (if any), the beneficiaries or class of beneficiaries, and of any other natural person exercising effective control over the trust.
2. Member States shall ensure that trustees disclose their status and provide in a timely manner the information referred to in paragraph 1 to obliged entities, when, as a trustee, the trustee forms a business relationship or carries out an occasional transaction above the threshold set out in points (b), (c) and (d) of Article 10.
3. Member States shall require that the information referred to in paragraph 1 can be accessed in a timely manner by competent authorities and FIUs.
4. Member States shall require that the information in paragraph 1 is held in a central register when the trust generates tax consequences. The central register shall ensure timely and unrestricted access by competent authorities and FIUs, without alerting the parties to the trust concerned. It may also allow timely access by obliged entities when they are taking customer due diligence measures in accordance with Chapter II. Member States shall notify to the Commission the characteristics of these national systems.
5. Member States shall require that the information held in the central register referred to in paragraph 4 is adequate, accurate and current.
6. Member States shall ensure that obliged entities do not rely exclusively on the central register referred to in paragraph 4 to fulfil their customer due diligence obligations laid down in this Directive. Those obligations shall be fulfilled by using a risk-based approach.
7. Member States shall ensure that competent authorities and FIUs are able to provide information referred to in paragraph 1 and 4 to the competent authorities and FIUs of other Member States in a timely manner.
8. Member States shall ensure that the measures provided for in this Article apply to other types of legal arrangements with a structure or functions similar to trusts.
9. Within four years after the date of entry into force of this directive, the Commission shall submit a report to the European parliament and the Council assessing the conditions and the technical specifications and procedures for ensuring safe and efficient interconnection of the central registers. Where appropriate, the report shall be accompanied by a legislative proposal.

[27] Directive 2009/101/EC of the European Parliament and of the Council of 16 September 2009 on coordination of safeguards which, for the protection of the interests of members and third parties, are required by Member States of companies within the meaning of the second paragraph of Article 48 of the Treaty, with a view to making such safeguards equivalent (OJ L 258, 1.10.2009, p. 11).

Addition 9 February 2015

 Articles on the new register:

Over Ellen Timmer, advocaat ondernemingsrecht @Pellicaan

Verbonden aan Pellicaan Advocaten, http://www.pellicaan.nl/, kantoor Capelle aan den IJssel (Rotterdam), telefoon 088-6272287, fax 088-6272280, e-mail ellen.timmer@pellicaan.nl ||| Weblogs: algemeen: https://ellentimmer.wordpress.com/ ||| modernisering ondernemingsrecht: http://flexbv.wordpress.com/
Dit bericht werd geplaatst in English - posts in English on this blog, Europa, Financieel recht, onder meer Wft, Wtt, Fraude, witwasbestrijding, Wwft, Ubo-register en getagged met , , , . Maak dit favoriet permalink.

Een reactie op New gold digging area for criminals | the European registers on beneficial ownership | AMLD4

  1. Pingback: VNO-NCW: “Familiebedrijven vrezen inbreuk op privacy” | Ubo-register

Geef een reactie

Vul je gegevens in of klik op een icoon om in te loggen.

WordPress.com logo

Je reageert onder je WordPress.com account. Log uit / Bijwerken )

Twitter-afbeelding

Je reageert onder je Twitter account. Log uit / Bijwerken )

Facebook foto

Je reageert onder je Facebook account. Log uit / Bijwerken )

Google+ photo

Je reageert onder je Google+ account. Log uit / Bijwerken )

Verbinden met %s