Foreward by Andrew Chilvers
When the 5th Anti-Money Laundering Directive was introduced into law by the UK and EU in January 2020, for many professionals it was a much needed addition to legislation that would significantly help business transparency and combat money laundering. In essence, it was good for business and for public and professional confidence.
All jurisdictions signing up to the 5th Directive will build and maintain UBO registries that will be publicly available at any time. UBO registries will also be set up for bank accounts and trusts, although these latter two will not be publicly available but be accessed by the relevant authority such as financial intelligence units and legal advisors looking into money laundering. Investigative journalists who can show a legitimate interest in the case can also have access, which is vital if another Panama Papers (see below) is to be uncovered. Across the UK and EU national UBO registers will be set to connect through a central European platform by April 2021.
Please provide a brief overview of the UBO Register in your jurisdiction and its history?
In Luxembourg, the UBO Register is under the authority of the Ministry of Justice, although in practice it is administered by the Luxembourg Business Register.
The draft bill was introduced on December 6, 2017, but discussions were already ongoing, in particular with respect to whether the register should be open to the public or (partially/fully) restricted to competent authorities and persons with a legitimate intertest (and the definition and appreciation of such interest).
While Luxembourg may have been one of the last jurisdictions in the EU to publish a draft bill, it was one of the first to implement a UBO Register, on March 1, 2019.
The Luxembourg UBO Register aims at providing an easy and fully transparent overview of the beneficial ownership of all entities operating in Luxembourg and basic UBO data is accessible by the public.
How can your firm ensure your clients are fully compliant with the new / existing requirements?
The Luxembourg UBO Register law has introduced various due diligence and reporting obligations to all Luxembourg registered entities and we can assist complying with these obligations as well as inform of – and assist with – any potential exceptions.
Indeed, the UBO Register legislation does not amend previous AML/CFT legislation concerning the qualification of UBOs:
• A (reportable) UBO is therefore any natural person who (in) directly owns or controls 25% or more of the shares (capital, equity, votes, etc.) in an entity, or is able to exercise by any other means effective control over such entity, as provided by Luxembourg AML/CFT rules and regulations.
• If no natural person qualifies as UBO on the basis of the above criteria, directors will be regarded as a “reportable UBO(s)”.
However, the UBO Register law extends to all reportable entities the obligation to qualify and identify UBOs and requires these entities to register their UBOs with the UBO Register, unless an exception applies.
Exceptions may apply by default, i.e. in case of stock listed companies, or upon request, i.e. if a UBO is a minor or is incapacitated, or if the registration of a UBO carries disproportionate risks (life threatening risks, economic risks, etc.).
What changes can we expect to see emerging, are any new proposals expected?
No changes to the law or its implementation are expected.
What other information might be relevant?
Although the UBO register is accessible online and is not subject to either a registration or the payment of a fee, the data that are publicly available is limited to the name, nationality and date of birth of the UBOs (and their qualification).
Additional personal data are only available to certain entities and persons (i.e. national authorities, notaries acting as public officers, banks and financial institutions as well as bailiffs).
Entities that fail to comply with their reporting obligations, as well as UBOs who fail to provide required documents and information, may be liable to fines of up to €1,250,000.