Bill implementing the UBO register

On 31 March 2017, the bill to implement the UBO register was published. This register will include the data of the ultimate beneficial owners (UBOs) of Dutch companies. The bill implements the obligation arising from the European directive aimed at preventing the use of the financial system for the purpose of money laundering and terrorist financing.

We previously published on our website the intention of the Finance Minister, the Minister of Security and Justice and the Minister of Economic Affairs to set up a UBO register which will be accessible for all. In the meantime, this intention has been transposed into a draft bill in which the European directive will be implemented in the Dutch legislation and regulations.

Why?
Setting up the UBO register is an obligation from the ‘forth money laundering Directive’ (Directive 2015/849) for every member state of the European Union. The register is intended to make a valuable contribution to obtain more transparency on UBOs of companies and legal entities, in order to protect the integrity of the financial system for money laundering or terrorist financing, and the associated predicate offences, such as corruption, tax crimes and fraud.

Which entities?
The obligations from the UBO register will vest in legal entities and companies that currently must already register with the Chamber of Commerce. The following are concerned:

  • private limited company [besloten vennootschap met beperkte aansprakelijkheid (B.V.)]
  • public limited company [naamloze vennootschap(N.V.)]
  • foundation [stichting (also PBOs)]
  • association [vereniging (except for the Owners’ Association [Vereniging van Eigenaars)]
  • shipping company
  • partnership [maatschap]
  • general partnership [vennootschap onder firma (VOF)]
  • limited partnership [commanditaire vennootschap (CV)]
  • cooperative association [coöperatie]
  • mutual insurance association [onderlinge waarborgmaatschappij]
  • European Economic Interest Grouping (EEIG)
  • European public limited liability company (SE)
  • European cooperative company (ECC)

According to the Explanatory Memorandum, it is still being investigated whether, in addition to this list, the registration of UBO information should also have to apply for mutual funds. For the time being, there is no obligation for mutual funds to register with the Chamber of Commerce.

Who is concerned?
Under the bill, a UBO is a natural person who is the ultimate owner of a company or legal entity or has the control thereof. As far as companies are concerned, this means in short individuals who – ultimately – have 25% or more of the shares or voting rights or individuals who have actual control. A company or legal entity may therefore have more than one UBO or no UBO at all.

Which data?
The European Directive determines that the UBO register must hold adequate, accurate and current information on the beneficial owner and his economic interest in the entity in question. Under this bill, the following data must be included:

  • name
  • date, place and country of birth
  • nationality
  • address
  • nature and extent of the held beneficial interest
  • Citizen service number [Burgerservicenummer (BSN)] or a foreign tax identification number (TIN)
  • copy of documentation under which the UBO’s identity has been verified
  • copy of documentation with which it is substantiated why a person has the status of UBO and with which the nature and extent of that interest is proven

By whom?
Contrary to what was proposed by the ministers, the bill determines that only the entity itself is obliged to provide the UBO information. If this is not complied with, it will constitute an economic offence. Institutions and organizations that are obliged to determine UBOs under the Money Laundering and Terrorist Financing (Prevention) Act [Wet ter voorkoming van witwassen en financierung van terrorisme (Wwft)], such as banks, insurances and civil-law notaries, will not be obliged to provide UBO information. They are allowed to consult the register, but must also carry out further research themselves. If, in their opinion, there is reasonable doubt on the correctness of the UBO data provided, they must report this.

Access?
The European directive determines that at least government agencies and certain institutions must have access to the UBO information, but gives the member states the freedom to extend this access. The intentions announced earlier to make the UBO register accessible for the public has now been laid down in the bill, on the understanding that only certain data will become public, such as name, date of birth, nationality, state of residence and nature of the economic interest of the UBO in question. The other information is only open for inspection by the competent authorities.

Privacy?
By rendering the UBO register public for everyone, the privacy and private lives of UBOs can be affected. After all, with this new register information can become public that was not made public before. This is why this bill includes four guarantees in order to protect this privacy and private life. These are:

  1. registration of those applying for information;
  2. payment of a compensation for the inspection;
  3. inspection of restricted information;
  4. at request: protection of certain information of a UBO at a risk of fraud, kidnapping, blackmail, violence or intimidation.

As already argued by us before, this gives rise to the question to which extent the privacy is actually guaranteed by the recipient’s registration and the request for compensation.

To conclude
Under the directive, the UBO register must have been implemented in the European member states on 26 June 2017 at the latest. For the time being, the bill is available for public internet consultation. Any interested party may respond to the draft bill until 28 April 2017. What is more, additional legislation will be necessary still under the bill. The deadline set by the bill will probably not be met, but the UBO register will be set up for sure.

If you have questions as a result of this article, please contact Mr mr. drs. R.X.J. (Xander) Blokzijl.