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EU To Implement New 'Ultimate Owner' Rules

Monday, May 25, 2015

The European Parliament has endorsed plans to require the listing of the "ultimate owners" of companies on central registers in European Union (EU) countries.

The ultimate owners of companies will have to be listed in central registers in EU countries, open both to the authorities and to people with a "legitimate interest," such as investigative journalists.

The pending Fourth Anti-Money Laundering Directive will oblige EU member states to keep central registers containing information on the ultimate beneficial owners of corporate and other legal entities, such as trusts. The requirement was not included in the European Commission's initial proposal but was inserted by Members of the European Parliament (MEPs) during negotiations. MEPs voted in favor of the revised Directive on May 20.

The registers will be accessible to the authorities and their financial intelligence units, to "obliged entities" (such as banks carrying out customer due diligence duties), and to the public. Those requesting public access may have to register online and pay a fee to cover administrative costs. They will have to demonstrate a "legitimate interest" in suspected money laundering, terrorist financing, and in "predicate" offenses that may help to finance such activity, such as corruption, tax crimes, and fraud.

Where a request is successful, access could be given to the beneficial owner's name, the month and year in which they were born, and their country of residence, and to details about the entity's ownership.

Information on trusts will be accessible solely to the authorities and obliged entities. Where there are high-risk business relationships with "politically exposed persons" (people at a higher than usual risk of corruption due to the political positions they hold), it was agreed that additional measures should be put in place to establish the source of wealth and the funds involved. A transfers of funds regulation will improve the traceability of payers, payees, and their assets, it was said.

Once the Directive is formally adopted, member states will have two years to transpose the new Directive into their national laws. The transfers of funds regulation will be directly applicable in all member states 20 days after its publication in the EU Official Journal.

Vera JourovŠ, EU Justice Commissioner, welcomed the vote in Parliament: "Serious and organized crime is driven by profit - tracing the illicit proceeds of crime back to the criminal networks is essential both to detect, prosecute, and dismantle those networks and to seize and confiscate their criminal wealth. The new anti-money laundering rules adopted today will help us follow the money and crack down on money laundering and terrorist financing."