Earlier this year, we informed you about the envisaged introduction of an ultimate beneficial owner (“UBO”) register in the Netherlands (“UBO-register”), in implementation of Directive (EU) 2018/843 of the European Parliament and the Council of 30 May 2018 amending inter alia Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.
On 4 October 2019 (i) the memorandum of reply UBO register (nota naar aanleiding van het verslag UBO-register) and (ii) the memorandum of amendment to the legislative proposal that is known as the Implementation act registration ultimate beneficial owners of companies and other legal entities (implementatiewet registratie uiteindelijk belanghebbenden van vennootschappen en andere juridische entiteiten), have been published. On 2 October 2019 the Minister of Finance further published a letter to the Chairman of the Dutch House of Representatives (Tweede Kamer) regarding countering money laundering and financing terrorism. These documents provide for a better insight on recent developments with respect to (the implementation of) the UBO register in the Netherlands.
Additional measures for the protection of the privacy of UBOs
Initially, a self-chosen name and password will suffice, without thorough verification of the identity. The memorandum of reply UBO register mentions that the reliability of the identity of those who request access to UBO information shall be increased. Within the framework of the ‘Digital Government Act’, means of identification are being developed which may also be used when accessing the UBO register. In the aforementioned memorandum of reply it is also stated that UBOs will, in time, be able to see how many times their information has been granted access to (excluding consultations of the Dutch Financial Intelligence Unit and competent authorities).
Further, at registration of the UBO information, companies and other (legal) entities will be able to immediately opt for restricting access.
Clarification who is a (pseudo) UBO
Further, a clarification of the definition of UBOs (ultimate beneficial owners) is provided for. The memorandum of reply UBO register clarifies that in certain cases it is possible that a lower percentage than 25% also leads to the conclusion that a natural person qualifies as a UBO, for example if, pursuant to a contractual relationship the authority exists to appoint or dismiss the board (bestuur).
If resources to determine the UBO have been exhausted to no avail and on the condition that there are no grounds for suspicion, or if there is any doubt regarding a person ultimately owning or controlling a company or other (legal) entity and/or for the account of which natural person a transaction takes place, the natural person(s) who is/are part of the senior management of the company or other (legal) entity (i.e. the natural person(s) involved with the day-to-day management) qualify as UBO. For the purposes hereof, a natural person who is part of the senior management exclusively means: one or more managing directors (bestuurders) within the meaning of article 2:9 DCC, or, in case of a partnership, one or more partners (vennoten), with exception of a limited partner (commanditair vennoot) of a limited partnership. Therefore, in such case the UBO(s) (in everyday speech also referred to as “pseudo UBO(s)”) will need to be registered and from the ‘nature’ of his/her interest it may be concluded that it concerns person(s) who is/are part of the senior management. This clarification is particularly relevant for ANBIs (qualifying public benefit pursuing entities referred to in the Netherlands as: algemeen nut beogende instellingen) and trust offices.
Next to an automated check against the information registered in the trade register of the Dutch Chamber of Commerce, at registration in the UBO register of natural persons who are residing in the Netherlands an automated check will be performed against the information registered in the Persons Database (BRP). Further, the Dutch Chamber of Commerce shall perform a check on the document for the nature and extent of the UBO’s economic interest.
Organizations that are required by law to obtain UBO information for CDD purposes possibly be granted access to additional UBO information
The Minister of Finance has (also acting on behalf of the Minister of Justice and Security and the State Secretary for Economic Affairs and Climate) announced to have filed with the Dutch Data Protection Authority (Autoriteit Persoonsgegevens) a request for advice to grant organizations that are required by law to obtain UBO information for CDD purposes access to the additional information in the UBO register, as well as the use of the citizen service number and access to the information in the Persons Database (Basisregistratie Personen). When these organizations would be granted access to this additional information, this should increase the effectiveness of their customer due diligence (and their obligation to report any discrepancies found) and assist these organizations in their role as gatekeeper. Further, the memorandum of reply also clarified that after such report, the Dutch Chamber of Commerce shall add the words: “in investigation” to the UBO register.
What happens in case of non-compliance?
In the first 18 months after the registration obligation comes into effect, the Dutch Chamber of Commerce will write to all companies and other (legal) entities a request to register the UBOs. This will be done in phases and per type of entity to ensure that the processing of registrations runs smoothly. If such writing does not lead to registration, the Dutch Chamber of Commerce will send one reminder. The Dutch Chamber of Commerce provides the BEH (the Economic Enforcement Department of the Dutch Tax Authorities) with all necessary information from the entities whose UBOs are not registered in the trade register of the Dutch Chamber of Commerce after 18 months. BEH can then send another reminder. If there is no response, BEH can carry out investigations and, if necessary, proceed with enforcement. On the basis of the dual sanction system, BEH can draw up official reports (which are passed on to the Public Prosecutor for the purpose of criminal enforcement) and impose orders for a fine and/or an order subject to a penalty for non-compliance (for administrative enforcement).
UBO registers in other EU Member States
Pursuant to AMLD5, all EU Member States will need to make the basic UBO information publicly available in their national UBO register. Some jurisdictions (among which the Netherlands is not) have already implemented AMLD4, based on which a register with UBO information is already formed but where the abovementioned information is not publicly available. Those jurisdictions are obliged to make this information publicly available on 10 January 2020 at the latest.
Internal register should be updated regularly
Apart from the obligations related to the UBO register, the aforementioned legislative proposal obliges companies and other (legal) entities to maintain an internal (not public) register. The register should be updated regularly, meaning according to the memorandum of reply that the information should be in order, so that the tax authorities can always obtain up-to-date information on the state of affairs of the distributions.
Urgent for companies and other (legal) entities incorporated or established as of (as expected) 10 January 2020
At incorporation of companies and other (legal) entities after the Legislative Proposal entered into effect, registration of the UBO(s) will be a condition to have the companies and other (legal) entities registered in the trade register of the Dutch Chamber of Commerce and receive a so-called KvK number (a unique registration number in the trade register).
When will the UBO-register enter into force?
The UBO-register should be implemented on January 10th, 2020 at the latest. After entering into effect of the legislative proposal, those required to register UBO information in the UBO register have not more than 18 months to comply in case the company or other (legal) entity exists at the time that the legislative proposal enters into effect. In case such company or other (legal) entity is incorporated/established after entering into effect of the Legislative Proposal, the UBO information should be registered immediately (simultaneously with registration in the Dutch trade register).
How can we assist?
Buren can assist you with any question regarding the new obligations imposed by the legislative proposal. Among others, we can assist you with the UBO identification process, with filing or amending UBO information with the UBO register and also requesting restricted access to an UBO’s information. In Luxembourg we have been doing so since the Luxembourg law introducing a similar register was published on 15 January 2019.
In the wake of the developments concerning the COVID-19 / Coronavirus, BUREN has adjusted it’s policies to ensure that our services and responsiveness
In our previous alert we informed you that the Dutch UBO-register was expected to become operational on 10 January 2020.
In our publication of February 2nd, 2018, we provided for an update on the introduction of the UBO register in the Netherlands, prescribed for by the 4th