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.
How can your firm ensure your clients are fully compliant with the new / existing requirements?
ErsoyBilgehan incorporates a corporate and commercial law team as well as a banking and finance team, both with extensive experience in corporate consultancy and compliance projects. The skills and the experience we embody make us perfectly suited for assisting our clients in UBO-related matters.
What changes can we expect to see emerging, are any new proposals expected?
There was a proposal before the parliament to amend the legislation to record the owner of bearer shares in non-public joint-stock companies. Although the total volume of the bearer shares issued by joint-stock companies was not significant in proportion (less than %1 of total shares), such shares could still be misused to prevent the detection of the UBOs, as shares of non-public companies in Turkey are not recorded or monitored. The proposal has very recently passed into law, amending the Turkish Commercial Code and requiring bearer share holders to inform joint-stock companies that they hold such shares until 31.12.2021 and the companies to report such information to the Central Registry Agency (MKK) within five working days following the notification.
What other information might be relevant?
i. The Regulation sets forth the principles of identifying beneficial owners. Beneficial owner is defined as “natural person(s) who controls the natural persons, legal persons or unincorporated organizations on behalf of whom a transaction is conducted within an obliged party or who is the ultimate owner of the transaction or the account belonging to them”. As per article 17 of the Regulation, the natural person shareholder holding more than 25% of the legal entity’s shares is the beneficial owner. If it is suspected that the natural person who holds more than 25% of the legal entity’s shares is not the beneficial owner or if no natural person is holding more than 25% of the entity’s shares, the natural person who ultimately controls the legal person is deemed to be the beneficial owner. In the event the beneficial owner cannot be determined in accordance with these principles, the person in the position of the highest senior managing official in the entity is deemed as the beneficial owner.
ii. Turkey is a party to the Financial Action Task Force (FATF).
iii. Article 198 of the Turkish Commercial Code requires a notification to the trade registry with a board decision if there is a change in the ownership resulting in a shareholder’s share ratio exceeding or falling below 5%, 10%, 20%, 25%, 33%, 50%, 67% or 100% of the share capital of joint-stock companies. In limited liability companies, all share transfers are required to be executed before a notary and registered with the trade registry.
iv. The key findings regarding the transparency and beneficial ownership practices in Turkey are summarized under Chapter 7 of the FATF’s Mutual Evaluation Report for Turkey dated December 2019.