European implementation of 5MLD and Ultimate Beneficial Ownership (UBO) Registers
29 March 2019
As previously reported in the Q2 2018 edition of Allen & Overy’s European White Collar Crime Report, the European Fifth Anti-Money Laundering Directive (5MLD) entered into force on 9 July 2018, with an implementation deadline of 10 January 2020 (which may include the UK, depending on the terms of the Brexit transition period) and an implementation date of 10 January 2019 for provisions relating to anonymous safe deposit boxes.
5MLD imposes additional obligations, particularly on those in the finance sector and aims to, among other things, improve enforcement of 4MLD and to ensure tighter controls relating to high-risk third countries.
Among the changes introduced by 5MLD is the requirement to provide wider access to each Member State’s central register of beneficial ownership of corporate entities. Under 5MLD, these registers can now be accessed by the general public without the need for them to show a ‘legitimate interest’.
The table below provides an overview of how some Member States are implementing the requirement to maintain UBO Registers in their national law. Please see the following page for a summary of the implementation status of 4MLD.
|Country||5MLD and UBO register implementation status|
|Belgium||Legislative work has started on a draft bill implementing the 5MLD. No specific date can however be anticipated as to when the draft bill will be submitted to and passed by the Parliament. The UBO Register went live on 1 October 2018. Belgian companies and other relevant entities have until 31 March 2019 to upload and complete beneficial ownership information on the UBO Register. The Royal Decree of 30 August 2018 on the operating procedures of the UBO Register has implemented both the 4MLD and 5MLD requirements in relation to the completion, functioning of and access to the Register. Members of the public have restricted access to the UBO Register and will have to identify themselves through eID, and may only search the Register using a company’s Crossroads Bank for Enterprises number or company name. Given that companies have until end of March 2019 to update the Register, it seems likely that the Register will be lacking information until this deadline.|
|Czech Republic||The implementation of 5MLD is at an early stage in the Czech Republic but it has been flagged that significant changes to the Czech rules which govern UBOs are to be expected. The rules are likely to become more detailed as they seek to implement 5MLD.|
|France||5MLD is yet to be fully transposed into French law, although a draft bill is currently being considered by the French Parliament in order to allow the Government to transpose the directive through orders. In response to the implementation of 4MLD, a new decree entered into force on 21 April 2018 which includes provisions on UBOs. This decree specifies what is meant by a ‘beneficial owner’ – this includes whether the owner owns, directly or indirectly, more than 25% of the capital or votes, or if they have control over the company in a way which allows them to determine decisions in general assemblies of the company.|
|Germany||5MLD is yet to be implemented in Germany. 4MLD has been effective since 26 June 2017 in Germany and this established the German UBO Register. The requirement under 5MLD that UBO Registers are to be public is still to be satisfied as the current register only grants immediate access to certain authorities and individuals who can show they have a ‘legitimate interest’.|
|Hungary||The deadline for the database setup in relation to the implementation of the UBO Register in Hungary is 1 January 2019. Currently, third persons may request data from the central register but this is granted to those with a ‘legitimate interest’ only.|
|Italy||The UBO Register has not yet been implemented in Italy despite 4MLD having been implemented by Decree no. 90/2017. Second-level legislation is required to provide details on how companies’ obligations to disclose their UBOs should be carried out in practice, however, the deadline for issuing second-level legislation expired in July 2018. The implementation of the UBO Register could be postponed until after the implementation of 5MLD.|
|Luxembourg||Two UBO registers are in the process of being created in Luxembourg by two different laws. On the one hand, bill of law no. 7217 pertaining to the register of beneficial owners of companies and similar entities registered with the Luxembourg trade and companies register has been adopted through the Law of 13 January 2019 (the RBE Law). On the other hand, bill of law no. 7216, which was introduced before the Luxembourg Parliament on 6 December 2017 and implemented article 31 of the 4MLD pertaining to the register of trusts, has been divided into two separate bills following the adoption of the 5MLD: the first containing the information to be obtained and retained by trustees (no. 7216A) and the second concerning the register of trusts (no. 7216B). Bill no. 7216A has been adopted through the Law of 10 August 2018 regarding the information to be obtained and retained by trustees. Bill no. 7216B is still undergoing the standard legislative process and there is no visibility on the date on which the final law will be adopted. The transposition of 5MLD has not started yet, except that the law creating the RBE already anticipates a couple of changes required by 5MLD: access to the RBE will be granted to any person and beneficial owners of an entity registered in the RBE have an explicit obligation to provide all relevant information to that entity.|
|The Netherlands||5MLD has not yet been implemented in the Netherlands. The UBO Register has also not yet been implemented in the Netherlands. Although first steps for the implementation were taken, the process was put on hold due to the 5MLD coming into force. The deadline for the implementation was then extended to 18 months after the 5MLD went into force, meaning that the UBO Register should be implemented by 30 November 2019. In December 2018, the Dutch Minister of Finance informed the Dutch Parliament that a new draft bill regarding the UBO register is set to be published in March 2019. As of 18 March 2019, no such draft bill was published.|
|Poland||The act which implemented 4MLD postponed the implementation of a UBO Register until 13 October 2019 in Poland. The relevant ministry of the Polish Government has confirmed that it has not yet started working on the implementation of the additional requirements of 5MLD.|
|Romania||4MLD has not yet been adopted in Romania and the EC has begun infringement procedures in respect of this. The current draft law which would transpose 4MLD into Romanian law does not include provisions which would meet the 5MLD requirements on UBO registers.|
|Spain||5MLD has not yet been implemented in Spain although the Spanish Council of Ministers approved Royal Decree 11/2018 in August 2018 on the transposition of a number of directives, which includes the prevention of money laundering. This entered into force on 4 September 2018 and incorporates 4MLD within Spanish law. It requires entities subject to 4MLD to indicate their real owners and to keep a record of this in a marginal note within the relevant Commercial Registry filing.|
|United Kingdom||Provisions regarding anonymous safe deposit boxes implemented by 10 January 2019. As noted above, Member States are required to transpose the remainder of MLD 5 by 10 January 2020. This will be after the UK has formally left the EU, but within the transitional period currently envisaged in the draft EU Withdrawal Agreement. It is therefore assumed that the UK will implement 5MLD in full.|
The table below summarises the status of 4MLD’s implementation as at the end of Q4 2018 in various Members States:
|Country||4MLD implementation status|
|Belgium||Effective from 16 October 2017. The Belgian legislature has adopted the Act of 18 September 2017 on the prevention of money laundering and the financing of terrorism and on restricting the use of cash (Wet van 18 September 2017 tot voorkoming van het witwassen van geld en de financiering van terrorisme en tot beperking van het gebruik van contanten; Loi du 18 Septembre 2017 relative à la prévention du blanchiment de capitaux et du financement du terrorisme et à la limitation de l’utilisation des espèces).|
|Czech Republic||Effective from 1 January 2017. Amendment no. 368/2016 Coll. to the Act no. 253/2008 Coll., on Selected Measures against Legalisation of Proceeds from Crime and Financing of Terrorism.|
|France||Order No. 2016-1635 of 1 December 2016 still yet to be ratified by French Parliament, in order to have statutory force. Many provisions of Decree No. 2018-284 dated 18 April 2018 came into force on 1 October 2018.|
|Germany||Effective from 26 June 2017. Money Laundering Act (Geldwaschegesetz).|
|Hungary||Effective from 26 June 2017. Prevention and Combating of Money Laundering and Terrorist Financing Act.|
|Italy||Effective from 4 July 2017. Legislative Decree 90/2017, aimed at amending AML Legislative Decree No. 231/2007, entered into force on 4 July 2017. Second-level regulations still to be implemented by competent supervisory authorities.|
|Luxembourg||Legislative package implementing 4MLD in Luxembourg is composed of:
– the tax reform law of 23 December 2016, which has led to the insertion of criminal tax offences (fraude fiscale aggravée et escroquerie fiscale) into the list of predicate offences to money laundering;
– the Luxembourg Law of 13 February 2018: it implements the main provisions of the 4MLD and amends the amended law of 12 November 2004 on the fight against money laundering and financing of terrorism; – the Luxembourg Law of 1 August 2018: it implements Directive No. 2016/2258 pursuant to which national tax authorities shall be granted access to the mechanisms, procedures, documents and information referred to in articles 13 and 40 of the 4MLD;
– the Luxembourg Law of 10 August 2018 which amended the amended Law of 12 November 2004 on the fight against money laundering and the financing of terrorism, in order to ensure compliance with 4MLD (amendments relate to the Financial Intelligence Unit (Cellule de Renseignement Financier CRF)));
– Bill no.7216, which was introduced before the Luxembourg Parliament on 6 December 2017 and implemented article 31 of the 4MLD pertaining to the register of trusts, has been divided into two separate bills following the adoption of the 5MLD: the first containing the information to be obtained and retained by trustees (no.7216A) and the second concerning the register (no.7216B);
– Bill no. 7216A has been adopted through the Law of 10 August 2018 regarding the information to be obtained and retained by trustees. Bill no.7216B is still undergoing the standard legislative process and there is no visibility on the date on which the final law will be adopted. Following the adoption of 5MLD, the bill is expected to be amended notably so as to extend to any Luxembourg fiduciairy arrangement; and
– the Luxembourg law of 13 January 2019 pertaining to the register of beneficial owners (RBE) and implementing the provisions of article 30 of the 4MLD (the RBE Law), published in the Luxembourg official journal on 15 January 2019. The RBE Law will come into force on the first day of the second month following that of its publication in the Luxembourg official gazette (ie on 1 March 2019). Subject entities will then have six months to comply with the provisions of the RBE Law. The A forthcoming Grand Ducal Regulation will address the technical aspects relating to the RBE Law such as the costs of the registry, the modalities for an electronic registration or the right to access the registry.
This legislative package has been completed by the guidelines issued by the three European Supervisory Authorities (EBA/ESMA/EIOPA) on money laundering and terrorist financing risk factors which were adopted in Luxembourg via CSSF Circular 17/661 entered into force on 26 June 2018. It is also worth mentioning that a bill of law no. 7356 amending the Luxembourg Criminal Code and providing inter alia certain definitions of terrorist financing was introduced before the Luxembourg Parliament on 13 September 2018 and is currently undergoing the standard legislative process.
Bill of law no. 7356 implements Directive (EU) 2017/541 of the European Parliament and of the Council of 15 March 2017 on combating terrorism and replacing Council Framework Decision 2002/475/JHA and amending Council Decision 2005/671/JHA.
|Poland||4MLD was implemented by the new Act on Counteracting Money Laundering and on the Financing of Terrorism dated 1 March 2018 which was published on 12 April 2018. It came into force on 13 July 2018, with the exception of Chapter 6 and Articles 194 and 195 concerning the establishment of a Central Register of Beneficial Owners, which will come into force on 13 October 2019.|
|Romania||Not yet implemented. After its adoption, the draft law has been sent back to the Parliament in order to be amended, so that it complies with the Romanian Constitution. This process may take several months. Given that the deadline for implementing the Fourth AML Directive elapsed, it is possible that the Government may issue an emergency ordinance to expedite the process.|
|Slovakia||4MLD was implemented in Slovakia via Act No. 52/2018 Coll., which was an amendment to the Slovak Anti-Money Laundering Act. The amendment took effect on 15 March 2018, although certain selected provisions will only come into effect on 1 November 2018.|
|Spain||Effective from 4 September 2018. On 30 August, the Spanish Council of Ministers approved Royal Decree 11/2018, 31 August, on the transposition of directives on the protection of pension commitments with workers, prevention of money laundering and requirements for entry and residence of third-country nationals, which incorporates the IV AMLD within Spanish law, and amends Law 10/2010, of April 28, on the prevention of money laundering and the financing of terrorism.|
|The Netherlands||Effective from 25 July 2018. Please note that provisions regarding the ultimate beneficial ownership register were implemented in a separate Act.|
|United Kingdom||Effective from 26 June 2017. Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.|