Introduction of a central UBO Register in the Netherlands

On 20 May 2015 the European Parliament adopted the so-called Fourth Anti-Money Laundering Directive 2015/849/EC (“AMLD”) that seeks to prevent money laundering and terrorism. AMLD requires amongst others the introduction of a register identifying the ultimate beneficial owner (“UBO”) of corporate entities, trusts and other legal entities and legal arrangements similar to trusts that are established under the laws of a Member State. Under the AMLD, each Member State must establish such register prior to 26 June 2017. Each Member State is furthermore permitted to set specific rules and regulations on the disclosure of an UBO and restrict the access to the UBO register. Although the Dutch government already on 5 July 2016 released a legislative proposal to implement parts of the AMLD, only on 31 March last a draft bill (“Draft Bill”) was presented for public consultation that aims to introduce a central UBO register.  

Main aspects central UBO register

In this Alert the main aspects of the Draft Bill and the central UBO register are summarized.

• UBO is defined as the individual who ultimately owns or controls a business or legal entity. No percentages of control or ownership are mentioned. At present a threshold of holding a (direct or indirect) ownership or control of over 25% applies. The Dutch government announced that it intends to include in a separate decree (“Decree”) a more detailed description of who is to be considered as UBO for each type of business and legal entity.
• UBO information must be registered in respect of businesses established in the Netherlands and legal entities with a registered office in the Netherlands[1]. Foreign law incorporated legal entities with a business address in the Netherlands are excluded from registration. This also applies to trusts and other similar legal arrangements. Also excluded is a legal arrangement that constitutes a mutual fund under Dutch law (fonds voor gemene rekening), however the Draft Bill mentions that further analysis is required if such a mutual fund insofar it is organized as a corporate income taxpayer should also fall within the scope.
• Under the Draft Bill the UBO information should be registered with the Dutch trade register at the Chamber of Commerce.
• Registrable UBO information shall include (i) social security number or a foreign tax identification number (ii) name, month and day of birth, nationality and country of residence (iii) day, place and country of birth, address (iv) nature and size of the economic interest as held by the UBO (v) documents verifying the identity of the UBO (vi) documents supporting the nature and size of the UBO’s economic interest.
• The size of the economic interest of a UBO should be reported by using three bandwidths: 25%-50%, 50-75% and 75%-100%, but without disclosing monetary amounts.
• Although the Draft Bill provides for a publicly accessible UBO register, subject to the payment of a fee, there are several safeguards to protect the privacy of the registered UBO. For example, the keeping of a register of parties accessing the UBO register, the possibility for a UBO to request a restricted access for the public when there is a risk of fraud, kidnapping, blackmail, violence or intimidation, when a UBO is a minor or incapacitated person. Restricted access means that only the UBO information mentioned under 4, items (i) – (iii) will be made available.
• According to the Draft Bill, the registration of a UBO and the public access to such personal data does not infringe fundamental European human rights as laid down in the European Convention on Human Rights.
• Designated competent authorities will have access to all items of UBO information, whereas the general public only is authorized to access the UBO information mentioned under 4, items (i) – (iv).  The other items are only available for designated competent authorities.
• It is not possible to browse in the UBO register by a name of an individual, but only by the name of a registered business or legal entity.
• According to the Draft Bill the owner of a business or any director of the legal entity has the obligation to register a UBO.
• Not providing accurate or updated information on an UBO to the UBO register will be considered an economic offence.

Concluding remarks

The Draft Bill only provides for a general framework of the introduction of a central publicly accessible UBO register. Although some questions with respect to the UBO register have been answered, more practical guidance is likely to be provided in the Decree and during discussions of the Draft Bill in Parliament. Where the entire legislative process still requires several steps and also the implementation by the Chamber of Commerce is likely to take some time, it remains to be seen if the targeted deadline of 26 June 2017 will be met. In addition the Draft Bill allows a period of 18 months after the Draft Bill has been passed to report the UBO information.

[1] Qualifying entities organized under Dutch law include: BV, NV, foundation, association, general partnership (maatschap), partnership (vennootschap onder firma), limited partnership, cooperative