From 1st March 2019, Luxembourg entities will have to keep a register of their Ultimate Beneficial Owner (UBO) in order to be compliant, following similar moves in other EU countries such as UK or Belgium.
This register (RBE) has been introduced by the law dated January 13, 2019, which transposes provisions of the 4th anti-Money Laundering Directive (AML Directive, dated May 20, 2015) into Luxembourg Law.
Comparable initiatives outside the EU have been also implemented (including Singapore, Cayman Islands or Hong Kong).
The central register will be maintained by the Luxembourg Trade and Business Register (RCSL) and supervised by the Ministry of Justice.
Who should be reported as a Beneficial Owner?
According to the law of 12th November 2004, UBO are defined as follows:
Any natural person who ultimately owns or controls a Luxembourg legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that entity.
A direct or indirect ownership of more than 25% of the capital held by an individual is the general guideline to indicate ultimate beneficial ownership.
If such 25% shareholding is reached through the holding of various intermediate companies being ultimately held by the same UBO, this person will be considered as UBO, too.
If there is no natural person owning 25% of the company, information on the controlling officer of the company must be disclosed, typically the director(s) of the entity.
Which entity is concerned by the Law?
Any Luxembourg companies and corporate partnership (SA, Sàrl, SAS, SCA, SCS, SCSp, SE, SNC, GIE, SC, FCP), non-profit organisations, investment funds, foundations, and registered branches of foreign entities (the Obliged Entities) must identify their UBO and record their information into the UBO register.
What information must be recorded in the register?
The Obliged Entities must collect and provide the following information concerning each of its UBO:
- Full name; nationality, date and place of birth, country of residence, private or professional address, national (Luxembourg or foreign identification number (as applicable) and;
- The nature and extent of the effective interests held into the entity
The Luxembourg entities will have to collect these information, file it into the RBE, update information within one month following it becomes aware of the change.
The information, and relevant modifications, filed into the Register shall be kept for a period of 5 years after the date on which the entity was removed from the company’s registry (due to dissolution or has ceased to exist).
What are the access rules of the UBO register ?
The UBO register is accessible by the following persons, without having to demonstrate any legitimate interest:
- National authorities (including regulator (Commission de Surveillance du Secteur Financier – CSSF), tax authorities) and credit and financial institutions, bailiffs and notaries, for the purpose of their duties, have an unlimited access to all information
- The general public (any individual residing in Luxembourg or outside) has an access to these information, except for the address and identification number of the UBO. The Register can BW consulted electronically and the Luxembourg Business Register will issue electronic or paper extracts.
On a case-by-case, the Obliged Entity may exceptionally request to restrict the access to the information for a maximum period of 3 years if it proves that this access will expose the UBO to a disproportionate risk (including risk fraud, kidnapping, blackmail, extortion, harassment, violence and/or intimidation, and if UBO is a minor or otherwise incapable). If the restriction is granted, it will be mentioned in the RBE.
What is the timeline to implement the register?
From 1st March 2019, the Obliged Entities will have 6 months to comply with their new obligations.
Not later than 1st September 2019, they are required to record the UBO in the RBE, and keep an internal file at its registered office. Upon request from the National authorities, the Obligated Entity shall also provide the information along with supporting documents within 3 days.
The technical aspects (electronic registration, procedure for the access, payment modalities) will be clarified later by way of Luxembourg Grand-Ducal regulations.
What are the penalties if the Obliged Entities don’t comply?
If the requirements regarding the UBO register are not complied with (such as late, wrong, incomplete or non-updated filing), the Obliged Entities can be liable to pay a fine from €1,250 to €1,250,000. The non-compliance can be reported to the Luxembourg prosecutor.
A similar fine will also apply to the UBO who do not provide the required information and documents to the Obliged Entity.
Fidinam can assist you complying with this new regulation, i.e to determine if your entity is subject to such obligation, to identify the UBOS, to record the information in the Register, and to perform any other formality (such as requesting to limit the access to information filed in the RBE).