The long awaited Royal Decree that implements the law on the prevention of money laundering and financing of terrorism was published in the Belgian Official Gazette on 14 August 2018. It clarifies the operating conditions of the register of ultimate beneficial owners (UBO register) and enters into force on 31 October 2018.
As you could read earlier in our previous articles of 7 November 2017, 12 December 2017 and 24 July 2018, the law of 18 September 2017 on the Prevention of Money Laundering and the Financing of Terrorism introduced a register of ultimate beneficial owners, the so-called "UBO register".
The UBO register is a central register managed by the Ministry of Finance, which aims to provide sufficient, accurate and up-to-date information on the ultimate beneficiaries of companies set up in Belgium, non-profit associations and legal constructions which are comparable to trusts. It has been created, among other reasons, to facilitate the detection of money laundering and to expose constructions for the financing of terrorism.
The Royal Decree regulates the further details relating to the UBO register.
1. Who has to provide information to the Belgian UBO register?
All companies incorporated in Belgium must comply with the obligations relating to the UBO register.
This also includes companies without legal personality, such as partnerships, but also all associations under Belgian law, (international) non-profit organisations, Belgian foundations, trusts and entities similar to trust or fiducie.
Entities who have their headquarters in another EU member state must report the information to the UBO register of the country in question.
2. Who are the "ultimate beneficial owners"?
The law lists various categories of beneficial owners according to the legal entity to which they are linked, namely (a) companies, (b) (international) non-profit organisations and foundations and trusts, and (c) other legal entities that are similar to trusts.
(a) Are to be considered as ultimate beneficiaries in the case of companies:
- The natural persons who directly or indirectly hold an adequate percentage of the voting rights or of the ownership interest in the company. The purpose is to identify the beneficial owners who have an effective interest or control over the company responsible for providing the information through other companies or foreign legal entities and to identify ownership structures that are intended to have effective control or an effective interest in the company responsible for providing the information. As an indication of an "adequate percentage", a 25% interest is assumed.It is assumed that if 25% of the shares or voting rights in a company are held, this is an indication of a direct ownership interest. If another company of which the individual is a shareholder or holds voting rights holds 25% of the shares of the target company, this is an indication of an indirect ownership interest.
- The natural persons who control the company through other means.This includes, for example, the persons who actually control the company, have the authority to appoint members of management, administrative or supervisory bodies within the company, who have a veto right, and so forth.
- The natural persons belonging to the management personnel, such as the CEO, CFO, etc. This last category concerns a residual category and may only be invoked if, (i) after exhausting all possible means, none of the persons referred to under the two above categories have been identified, or if (ii) there is doubt as to whether the persons who have been identified are ultimate beneficiaries
(b) Are to be considered as ultimate beneficiaries in the case of (international) non-profit organizations and foundations:
- the members of the board of directors;
- the persons authorised to represent the association;
- the persons in charge of the daily management of the (international) association or foundation;
- the founders of a foundation;
- the natural persons or, if these persons were not yet designated, the category of natural persons in whose main interest the (international) non-profit association or foundation was established or is active;
- any other natural person who, through other means, ultimately has control over the (international) association of foundation.
(c) Are to be considered as ultimate beneficiaries in the case of trusts, fiducie and other similar legal constructions:
- the founder;
- the fideicommissary or trustee;
- the possible protector;
- the beneficiaries, or where the persons who are the beneficiaries of the fiducie or of the trust, have not yet been designated, the category of persons in whose main interest the fiducie or the trust was established or employed;
- any other natural person who, by virtue of being a direct or indirect owner or through other means, exercises ultimate control over the fiduciary or the trust.
3. Which information about the ultimate beneficiaries must be communicated to the register?
All companies, associations, foundations, trustees or fiduciary managers will communicate the following information about each of their ultimate beneficiaries to the UBO register:
- the name and first name;
- the date of birth;
- the nationality;
- the country of residence;
- the complete address of residence;
- the date on which they became ultimate beneficiaries;
- the national register number, or number of the Crossroads Bank for Social Security, and where applicable any comparable means of identification issued by the State of residence or of nationality;
- in the case of a company, whether it concerns direct or indirect ultimate beneficiaries. In the case of an indirect beneficiary, the number of intermediaries, and for each of them, the complete identification data, with at least the name, the date of establishment, the trade name, the legal form, the address of the registered office and the company number;
- in the case of a company, the size of the ultimate interest in the company.
4. Who has to communicate the information to the UBO register and when?
The members of the management body of the company or an association, the trustees or fideicommiciaries are responsible for submitting the above information to the UBO register.
The notification to the register must be made within a month from the time when the information regarding the ultimate beneficiary is known or modified.
Since the Royal Decree will take effect on 31 October 2018, the directors will have until 30 November 2018 to register all known information about the ultimate beneficiaries of the company.
It is of the utmost importance that the obliged entity has the supporting documents with which he can prove that the transferred information is correct.
5. Which sanctions can be imposed?
If the directors, trustees or fiduciary managers fail to communicate (in time) all required information about the final beneficiaries to the register, or if they provide incomplete or incorrect information, they can be punished with an administrative fine of EUR 50 to EUR 5,000.
6. Who has access to the UBO register?
Firstly, the data of the register are accessible to "the competent authorities", such as the police services, the Financial Information Processing Unit and any other government authorities responsible for the fight against money laundering, the financing of terrorism or any other related crimes.
As well, any persons who are subject to the Money Laundering Act and who, in the context of their professional activities, have to check whether they are dealing with criminals, have access to the register. This category includes lawyers, notaries, real estate agents and accountants.
In addition, as far as companies are concerned, the register is also accessible to every citizen. The Royal Decree also takes into account the so-called "Fifth Anti Money Laundering Directive". Citizens don't have to motivate their application, but will have to pay a fee for a consultation of the register. This general access for every citizen will result in a far-reaching restriction of privacy. However, the consultation will be limited to certain data (not the place of residence), and will only be possible via the data of the company and not of the final beneficiary. As well, the application will be registered and will only be possible via an electronic identity card.
For other entities, the citizen must fulfil other conditions for access, such as demonstrating a legitimate interest.
The legal entities and the ultimate beneficiaries will not be informed about consultations of the UBO register that concern them.
7. Conclusion: mark 30 November 2018 in your calendars
In view of the possible severity of the punishments, it is crucial to take the necessary measures in good time, to collect the correct data about the right persons and to have them registered in the UBO register.
It is also important that you work out procedures within your organization to change the details of your final beneficiaries, which have to be sent to the UBO register within one month, as well as to work out a way in which the documents that prove that the information you provided is sufficient, accurate and up-to-date will be collected.
The Minister of Finance will most likely issue more detailed provisions.