A new instrument in the fight against money laundering and terrorist financing
The UBO register, or the "register of ultimate beneficial owners", has been introduced by the law of 18 September 2017 transpositing Directive (UE) 2015/849 into Belgian law.
The law of 18 September 2017 on the prevention of money laundering and terrorist financing and the restriction on the use of cash was published in the Belgian Official Gazette of 6 October 2017. This law ensures the transposition into Belgian law of Directive (EU) 2015/849 issued on 20 May 2015 which we have discussed in a previous article. It has entered into force on 16 October 2017 and abrogates the previous law of 11 January 1993.
This law has completely updated and rewritten the preventive mechanism relating to the combat against money laundering and terrorist financing following the important developments at a European and international level, including the recommendations of the Financial Action Task Force (FATF).
We address below the main innovation introduced by the law: the setting-up of the UBO register.
The register of ultimate beneficial owners, known as “UBO register”, is an instrument complementary to the obligations of reporting and vigilance, that aims to provide adequate, accurate and current information on the beneficial owners of the companies, NPO’s, trusts and fiduciaries incorporated in Belgium.
1. Who are the beneficial owners?
The notion of beneficial owner applies, for companies, to the individuals who ultimately own or control the legal entity as a result of owning directly or indirectly a sufficient percentage of shares, voting rights or share capital in that entity.
The capital participation (more than 25%) in a company will be from now on a sign of direct ownership, or indirect in case of participation through another company.
The beneficial owners of a NPO or a foundation can be multiple: the directors; the individuals who are entitled to represent the NPO; the individuals in charge of the daily management; the founders of the foundation; either the individuals, or the category of individuals when these have not yet been appointed, in whose interest the foundation or the NPO has been established; any other individual who ultimately controls the foundation or the NPO through other means.If the individuals cannot be identified or if there is any doubt that the identified persons are the ultimate beneficial owners, the individuals who hold the position of senior managing official should be identified.
Are considered as beneficial owners of trusts, the settlor; the trustee; the protector; the beneficiaries or the category of persons in whose interest the entity has been set up or operates as well as any other individual who ultimately controls the trust through direct or indirect ownership or through other means.
2. What is to be found in the UBO register ?
As mentioned, the register must contain adequate, accurate and current information on the beneficial owners. However, the exact content of the gathered information is yet to be set by Royal Decree. It emerges from the Directive that the register must at least contain the name, the month and year of birth, the nationality and the country of residence of the beneficial owner as well as the nature and extent of the beneficial interest held.
In any case, the collection and the preservation of information on their beneficial owners fall within the responsability of the companies and other legal entities incorporated in Belgium.
3. Who has access to the UBO register ?
At the moment, the practical operating procedures of the UBO register have not been set yet by Royal Decree.
The Directive ensures:
- an access without any restriction for competent authorities and financial intelligence units (e.g. CTIF-CFI);
- an access only intended for research relating to their own clients for the entities subject to the obligations of identification and vigilance; and
- a limited access for any person or organisation that can demonstrate a legitimate interest.
The Directive also provides for an exemption, on a case-by-case basis in exceptional circumstances, to the access to the UBO register by entities and persons that can demonstrate a legitimate interest, where such access would expose the beneficial owner to the risk of fraud, kidnapping, blackmail, violence or intimidation, or where the beneficial owner is a minor or otherwise incapable.
Awaiting the publication of the Royal Decree, a state of doubt remains concerning the possibility for the tax authority to access the UBO register for other purposes than the fight against money laundering and terrorist financing, namely in the framework of an ordinary tax audit.
While the law is already into force, we will have to wait for the publication of the Royal Decree to fully know the practical functioning and the conditions of use of that UBO register.
We are closely monitoring the legislative process and will inform you of the content of the Royal Decree to be published.