What you need to know and do
The Luxembourg Parliament has recently passed bill of law 7217 on the Register of Beneficial Owners (the RBE Law) - which transposes article 30 of the EU's 5th AML Directive into Luxembourg law. The new law will enter into effect on March 1, 2019.
The purpose of the RBE Law is twofold:
- Ensure that the Luxembourg obliged entities obtain and hold adequate, accurate and current information on their beneficial ownership; and
- Ensure that such information is held in a central electronic national register of beneficial owners, to be named the Registre des Bénéficiaires Effectifs (the RBE).
The following is a short guide to help you quickly understand how the RBE Law will affect your organization and what new obligations your entity has to comply with thereunder.
Are you subject to the RBE Law?
The following entities are subject to the RBE Law:
- All commercial companies as well as any other legal entities registered with the Luxembourg Trade and Companies Register (including public limited liability companies, private limited liability companies, partnerships limited by shares, common limited partnerships, special limited partnerships, civil companies, foundations, interest groupings and European interest groupings)
- Investment funds and mutual funds (FCPs)
- Branches of foreign companies opened in the Grand-Duchy of Luxembourg.
What are your obligations under the RBE Law?
If your entity falls within the scope of the RBE Law, you are required to:
- Obtain adequate, accurate and up-to-date information as well as relevant supportive documentation from and on your beneficial owners
- Internally file and maintain such information and documentation at your entity's registered office
- Make such internally recorded information and documentation available to certain competent authorities and other professional entities
- Upload such information and documentation to the RBE
If your entity is a listed company on a regulated market, only the name of the market on which the securities are admitted to trading needs to be registered with the RBE.
Under the RBE Law, the beneficial owners of an entity are subject to a criminally sanctioned obligation to provide the relevant, necessary and up-to-date information to identify them and the beneficial interests they hold in the concerned entity.
Who qualifies as beneficial owners?
The RBE Law cross-references the definition of beneficial owners given in the Luxembourg law dated November 12, 2004 on the fight against money laundering and terrorist financing as amended. It defines beneficial owners as "any natural person who ultimately owns or controls an entity and/or any natural person on whose behalf a transaction or activity is conducted."
For a corporate entity, any natural person directly or indirectly holding a percentage of more than 25% of its shares or voting rights is deemed to be a beneficial owner.
If, after having exhausted all possible means and provided that there are no grounds of suspicion, no beneficial owner can be identified, or if there is any doubt that the person(s) identified are the beneficial owner(s), information has to be provided with respect to the natural person(s) who hold the position of senior management.
What information and documentation do you need to store on the beneficial owners both at your entity's registered office and in the RBE?
- First and last name(s)
- Date and place of birth
- Country of residence
- Exact private or professional address
- Identification number
- The nature and extent of the beneficial interests they hold in the entity
This information may be supported by the following documentation: identity document (passport or ID card), utility bill, copy of the shareholders' / members' register, list of the shareholders / limited partners, up-to-date list of the directors, legal representatives of the entity and their identity documents. The exact supporting documentation required should be further listed in a forthcoming grand-ducal regulation.
Who can access the information on your beneficial owners registered in the RBE?
- Luxembourg competent authorities with designated responsibilities for combating money laundering or terrorist financing (such as the financial intelligence unit, public prosecutor investigating judge(s), financial regulator (CSSF), insurance regulator (CAA))
- Luxembourg tax authorities
- Credit institutions, professionals within the financial sector, insurance undertakings and UCITS management companies licensed or authorized to carry out their activities in Luxembourg, and the self-regulated bodies (such as the Luxembourg Chamber of Notaries, the Luxembourg Bar Association, the Institute of Registered Auditors) when acting within the scope of their anti-money laundering obligations or customer due diligence procedures
- Any member of the general public.
What information on your beneficial owners registered in the RBE will be available to whom?
- The national authorities and other professional entities listed above, acting within the scope of their anti-money laundering obligations or customer due diligence procedures, will have full access to all information on the beneficial owners contained in the RBE.
- Any member of the general public will have access to all information on the beneficial owners contained in the RBE except for the address and identification number of the beneficial owners.
How to restrict access to the information on your beneficial owners registered in the RBE?
- Your entity or your beneficial owner(s) may request to restrict access to their relevant information.
- However, such restriction of access may only be granted in certain exceptional circumstances and for a limited period of time, where disclosure of such information would expose the beneficial owner to a disproportionate risk - such as a risk of fraud, kidnapping, blackmail, violence, intimidation - or where the beneficial owner is either a juvenile or legally disabled.
What are the different timeframes for compliance?
- Transitional period: The existing entities subject to the RBE Law will be given a six-month period after the entry into force of the law to comply with its provisions (i.e. until September 1, 2019). Public access to the RBE should be available from September 1, 2019.
- Filing the relevant information on the beneficial owner(s): Once the transitional period has expired, it shall take place within the month the entity has become or should have become aware of an event or circumstance requiring a filing with the RBE (ie a change in the beneficial owner(s) or a change affecting the beneficial owner(s) or the formation of any new entity).
- Keeping the information and documentation related to the beneficial owners after the winding-up of the entity: Information and documentation on beneficial owners kept at the registered office shall be retained for five years after the winding-up of the entity at the place designated in the liquidation deed. Data filed in the RBE shall also be kept for five years after the winding-up of the entity.
How is the relevant information filed with the RBE?
Filing will be done electronically on a dedicated platform maintained and monitored by the Luxembourg business registers under the supervision of the Luxembourg Ministry of Justice.
Operational details relating to the RBE - such as the electronic filing procedure, amount of fees to be paid, list of supporting documents to be filed, etc. - have yet to be determined by an upcoming grand-ducal regulation.
What are the sanctions in case you do not comply with the RBE Law?
A fine ranging between €1,250 and €1,250,000 may be imposed on the entities subject to the RBE Law as well as on the beneficial owners if they fail to comply with their respective obligations under the RBE Law.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.