Today, the new Anti-Money Laundering Act (the “AML Act”), was published in the Belgian Official Gazette. This act incorporates the Fourth EU Anti-Money Laundering Directive 2015/849 (“Fourth AML Directive”) into Belgian law. It will enter into force as from 16 October 2017.
One of the most significant features of the new AML Act is the establishment of a central register at the Ministry of Finance (the “UBO Register”) to which all companies established in Belgium, (and certain other legal entities) will have to provide information regarding their Ultimate Beneficial Owner(s) (“UBO”).
This newsletter will deal with the implications of this new obligation with regard to companies.
Why the need for an UBO Register?
AML legislation traditionally requires organizations like financial and credit institutions (“Obliged Entities”) to investigate and verify their clients’ identity, including their UBOs.
For sake of greater transparency and to better facilitate this obligation the Fourth AML Directive requires all Member States to set up a central register where accurate and up to date information regarding the UBOs can be consulted.
Who qualifies as an UBO?
The AML Act defines an UBO as (1) any natural person(s) who ultimately owns or controls the legal entity and/or (2) the natural person(s) on whose behalf a transaction or activity is being conducted.
(1) Person(s) who own or control the legal entity
If it is not possible to identify the aforesaid ultimate beneficial owners, after exhausting all means, the natural person(s) who are senior managing officials within the company (directors, managers or officers) shall qualify as the company’s UBOs.
(2) Person(s) on whose behalf a transaction or activity is being conducted
Any person who benefits or could/will benefit from a transaction or business relationship and who by fact or by law has the power to decide on the execution of the transaction or the establishment of a business relationship.
Which entities have to provide information to the UBO Register?
The obligation to provide information to the register will apply to all companies established in Belgium, foundations, (international) non-profit associations as well as trusts and fiduciaries (and similar arrangements).
Although Obliged Entities do not have to verify the UBOs of listed companies, any company established in Belgium (including listed companies) will still have to provide the required information to the UBO Register.
Although not defined in the AML Act itself, the term “companies” logically refers to all companies organized in accordance with the Belgian Companies Code including limited companies (e.g. NV/SA, BVBA/SPRL), partnerships, cooperatives (CVBA/SCRL) and other corporate entities in the broad sense of the word.
Trusts, fiduciaries (and similar legal arrangements) will also be subject to the UBO obligations, but the implementation has been postponed, in view of the upcoming Fifth AML Directive (expected October 2017).
What information will have to be provided to the UBO Register?
At least the following information will have to be provided to the Register:
- the UBO’s name, date of birth, nationality and address;
- the nature and extent of the beneficial interest held.
A future decree (see below) will set out the required information in greater detail.
How will the information be collected and processed by the register?
The practicalities regarding the register have yet to be determined by decree.
With regard to companies, however, it is already known that the UBO information will have to be provided by the directors to the register, electronically, within one month time from the date when the data become known or are modified.
Who will have access to the register?
The future decree will also have to determine who has access to the register, and under what terms.
According to the Directive, however, access must at least be granted to
- competent authorities;
- financial and credit institutions (and other Obliged Entities) in the framework of their AML obligations;
- any person or organization that can demonstrate a legitimate interest.
The Fourth AML Directive offers member states the option to charge a fee for access to the register.
What are the sanctions in case of non-compliance?
First, if a company fails to timely comply with its UBO identification obligations, its directors can not only be held liable by the company but also be punished with fines ranging from minimum EUR 50 to maximum EUR 5,000 under the Companies Code.
Second, the AML Act provides for an administrative fine, issued by the Minister of Finance, ranging between EUR 250 and EUR 50,000 for failure to comply with the UBO identification obligations.
From which date on will the information need to be provided to the UBO register?
All depends on the date of publication of the decree that will determine the practicalities of the UBO register. The decree is expected to be published in February 2018. The register should also be up and running by June 2018.