Will the new UBO register soon finally be implemented? After postponing the implementation of the register several times, Finance Minister Hoekstra is expected to present the draft bill for a register of ultimate beneficial owners ('UBO register') to the Dutch Lower House of Parliament any day now. The new directive should then be implemented into legislature during the second half of 2019. Several European member states, including the Netherlands, failed to meet the implementation date to establish a UBO register. On the basis of the fourth EU anti-money laundering directive, member states had until 26 June 2017 to do so.
02 Nov 2018
Why the UBO register?
As a result of the fourth anti-money laundering directive, the amended Money Laundering and Terrorist Financing Prevention Act (Wwft for short, in Dutch) entered into force on the 25th of July this year. The measures in the new Act are intended to further tackle the laundering of money obtained from crime, and financing (by means of money or objects) for terrorist purposes. In addition, under the fourth anti-money laundering directive, European member states are obliged to set up a central register with information on ultimate beneficial owners (UBO) of companies and other legal entities. A so-called UBO register.
What is the UBO register?
The UBO register catalogues the ultimate beneficial owner of almost all legal entities. A UBO is a natural person who is the ultimate stakeholder, or who has control over these legal entities (for example a major shareholder). It is already clear that, according to the Act, it is the obligation of the legal entities themselves to register their UBO(s). The Chamber of Commerce will take over the management of the UBO register. In short, an ultimate beneficial owner is an individual who:
- Has a direct or indirect interest of more than 25% in the capital of a private limited liability company (‘B.V.’) or public limited company (‘N.V.’);
- Directly or indirectly has an ownership interest of more than 25%, or can exercise more than 25% of the votes in the event of an amendment to the articles of association, or has actual control over a foundation or association;
- Directly or indirectly has an ownership interest of more than 25% or can exercise more than 25% of the votes in the event of acts of management and/or amendments to the cooperation agreement in the event of a general partnership, association, limited partnership, and shipping line (a ‘v.o.f.’, ‘maatschap’, ‘C.V.’, and ‘rederij’, in Dutch).
However, not every legal entity will have the obligation to register UBOs. An outline of some entities that will/will not be subject to a registration obligation:
|Obliged to register UBOs||Not obliged|
|- LLC's & PLC's||- Sole proprietor|
|- Edifications & Associations||- Juridical statutory person|
|- Trusts||- Homeowner association|
|- Cooperatives & limited partnership business
entity ('CV', in Dutch)
| - Several historic juridical entities (like courtyards
('hofjes'), 'boermarken', foundations and guilds)
|- Church societies|
|- Mutual guarantee association|
|- European Economic Interest Groupings|
|- European Limited Companies|
|- Europese Cooperative Societies|
What information is in the UBO register?
The anti-money laundering directive states that certain information in the UBO register must be public. Public information in the UBO register:
- Month and year of birth
- Country of residence
- Nature and size of the (economic) interest held in three ranges: 25-50%, 50-75% and 75-100%
Information such as the Citizens Service Number (‘BSN’), date and place of birth are not public in the register. However, entitled authorities are always able to access these details.
Is the privacy and anonymity of UBOs at stake?
By setting up a UBO register, the privacy of ultimately interested parties can no longer be guaranteed. It goes without saying that honest major shareholders such as family businesses and wealthy individuals (so-called High-Net-Worth Individuals, HNWI) who have nothing to do with terrorism or money laundering, fear for their privacy and anonymity.
To protect the privacy and security of UBOs, Finance Minister Hoekstra has therefore drawn up a number of safeguards. The question is whether these safeguards offer sufficient protection for UBOs. Wealthy individuals have reasons to keep their data anonymous. Does a certain structure offer any form of anonymity? In a subsequent publication I will offer more insight on the so-called fund of common account (‘fonds van gemene rekening’).