Beneficial Ownership Registers

Private Wealth

"As Through a Glass Darkly..."

Many countries have created, or committed to create, beneficial ownership registers - some public, others semipublic. While tax havens argue such registers should only be compulsory when introduced globally, we expect central ownership registers to be the global norm by 2023.

FATF Guidance (2014)

In 2014, the Financial Action Task Force (FATF), an intergovernmental body setting global AML standards, issued guidelines against the misuse of legal persons and arrangements for criminal purposes including tax crimes and corruption.

FATF Recommendation 24 and 25 ask countries to "ensure that there is adequate, accurate, and timely information on the beneficial ownership and control of legal persons [and] on express trusts, including information on the settlor, trustee and beneficiaries that can be obtained and accessed in a timely fashion by competent authorities" allowing them to "follow the money" during financial investigations.

At the end of 2016, over 200 jurisdictions have committed to systematically share beneficial ownership information either with competent authorities or the large public.

5th EU AMLD (2018)

In response to decades of secrecy which led, in April 2016, to the Panama Papers, the EU launched the 5th Anti-Money Laundering Directive (AMLD5):

• Entry into force: July 2018

• Transposition deadline: 10 January 2020

In the Age of Transparency

AMLD5 brings “transparency about who really owns companies and trusts to prevent money laundering and terrorist financing via opaque structures” in particular:

1) Transparency on the real owners of companies registered in the EU: Unlimited public access to European corporate beneficial owner registers in order to “enhance public scrutiny” (from the press, NGOs etc.).

• Beneficial Owner (BO): natural person ultimately controlling over 25% of a company’s shares or voting rights or exercising control via other means;

• Public BO data to include (i) name (ii) month and year of birth (iii) country of residence (iv) nationality (v) extent of beneficial interest (ranges are: 25-50%, 50-75%, >75%) and may include (vi) date of birth (vii) contact details;

• BO data to be retained at national and European levels "for a minimum of 5 years but no more than 10 years" after a company’s deregistration, or a trust’s end.

2) Transparency on the real owners of EU administered express trusts: Access to BO data of trusts limited to competent authorities (FIUs, tax authorities, supervisors) and "other persons who can demonstrate a legitimate interest" (such as an investigative journalist investigating corruption or money laundering):

• Country-specific trusts and similar legal arrangements (fiducie, Treuhand) are to be notified to the European Commission and published in the Official Journal of the EU;

• Trust BO data on (i) settlor (ii) trustee (iii) protector (iv) beneficiaries (v) any other controlling person is to be kept "where the trustee is resident" or, absent an EU trustee, in the EU country in which the trustee, on behalf of the trust, "enters into a business relationship" (that is, opens a bank account, purchases real estate etc.).

3) Interconnection of the beneficial ownership registers at EU level: each country’s central registers is to be linked to the European Central Platform (ECP).

Beneficial Ownership Registers Worldwide

The UK's Beneficial Ownership Register

The UK's beneficial ownership register was launched in 2016 under the name of People with Significant Control (PSC) Register. It was among the first European beneficial ownership registers.

• By 2021, the UK plans to introduce an "Overseas Entity ID" identifying overseas beneficial owners of UK real estate (in fact, over 40,000 London properties are owned off-shore)

• The UK trust register is semipublic

• In 2017, the UK has signed bilateral agreements with its Crown Dependencies (Guernsey, Jersey, Isle of Man) and Overseas Territories (Bermuda, BVI, Cayman Islands) on sharing BO data

• The Crown Dependencies' and Overseas Territories' systems are fully populated, yet semipublic for now

Germany's Beneficial Owners Register

The German Transparency Register ("Transparenzregister") is fully public since 2017.

Hong Kong's Beneficial Ownership Register

Since 2018, all companies registered in Hong Kong must maintain up-to-date beneficial ownership information in a semipublic Significant Controllers Register ("SCR") to be kept at the company's registered office (or another place in Hong Kong) in English or Chinese language.

• Every company in Hong Kong must designate at least one person able to assist law enforcement with regard to the SCR.

Luxembourg's Beneficial Ownership Register

Registre des bénéficiaires effectifs ("RBE"), fully public since 2019

Liechtenstein's Beneficial Ownership Register

AMLD4 implemented (since 1.8.2019), the implementation of AMLD5 in Liechtenstein is pending

• Trusts, foundations: only controlling persons need to be recorded (if none: trustee to be recorded)

Panama's Beneficial Ownership Register

Resident agents to disclose UBOs to new Superintendence body.

Singapore's Beneficial Ownership Register

Register of Registrable Controllers, semipublic

Is There a Beneficial Ownership Register in Switzerland?

In Switzerland, there is no centralized public beneficial ownership register as such. Instead, Swiss limited companies (in German AG, in French SA) have a duty to keep and update beneficial ownership data in-house (in the so called "share register", "Aktienbuch", "registre des actions", "registro delle azioni").

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References

FATF Guidance (2014) Transparency and Beneficial Ownership (here)

FATF – Egmont Group (2018) Concealment of Beneficial Ownership (here)

FATF (2019) Best Practices on Beneficial Ownership for Legal Persons (here)

STEP (2021) Beneficial Ownership Registers: The STEP Handbook for Advisers (Globe Law and Business) (here)