The Luxembourg law setting up a register of beneficial owners (the Law) which implements the EU Directive on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing has recently been published and will enter into force as of March 1, 2019.
Who does it concern?
All entities registered with the Register of Commerce and Companies in Luxembourg. This includes: commercial companies and partnerships (including investment funds) and subsidiaries of foreign companies.
What are the new obligations?
All affected entities will have to create and maintain an up-to-date internal file on their beneficial owners. Key information will have to be uploaded with a central electronic register of beneficial owners (the Register) to be operated by the Luxembourg business registers GIE (Groupement d'Intérêt Economique).
What is a Beneficial Owner?
The notion of "beneficial owner" is defined by the Luxembourg law on the fight against money laundering and terrorist financing. In a nutshell, it refers to any individual ultimately holding or controlling, directly or indirectly, at least 25 percent of the share capital, voting rights or ownership interests of an entity.
Which information is to be collected and uploaded?
Each entity concerned will have to identify its beneficial owner(s) and collect identification documents and file the following information relating to the person(s) so identified: name, surname, nationality, date and place of birth, country of residence, private or professional address, national or foreign identification numbers and nature and scope of the beneficial interest. Any modifications as to the beneficial owner(s) or the information relating to the latter will have to be uploaded to the Register within one month. Beneficial owner(s) are legally required to cooperate and provide the necessary information and documents in order for the affected entities to comply with their identification obligations. For listed companies the disclosure of the name of the regulated market on which their shares are traded is sufficient.
Although the provisions of the law will enter into force on March 1, 2019, affected entities benefit from a grace period and will have to comply with their new obligations from September 1, 2019.
Who will have access to the information?
Everyone will have access to the Register, including individuals, national authorities, and regulators. However, the public will only have limited access, for example addresses and identification numbers will not be available. In very limited circumstances, access to some information may be restricted, upon request from the registered entities or a beneficial owner.
The internal file to be kept by the entities must be made available to the relevant authorities and to entities subject to AML-CTF obligations for the performance of their duties.
What are the sanctions?
The failure of an entity to comply with these obligations and, with respect to beneficial owners, to provide any necessary identification documents and information is criminally sanctioned by a fine of between €1,250 and €1,250,000.
The Register will be up and running soon. All affected entities in Luxembourg should verify their group structure and start gathering identification information and setting up internal files and processes.