We previously informed you about the UBO register. That article addressed questions such as: what is a UBO, what is the UBO register and who is subject to the obligation to register? We pointed out that starting September 27, 2020, organizations have one and a half years – that is, until March 27, 2022 – to register their UBOs in the Trade Register. The UBO register plays a role in client due diligence under the Money Laundering and Terrorist Financing Prevention Act (Wwft).
Client screening
One of the objectives of the Wwft is to prevent undermining by criminal activities and to separate the “upper world” from the “underworld. This goal is achieved, among other things, by preventing criminals or terrorist organizations from laundering black money through the use of anonymity or complex transactions. To achieve this goal, institutions that may play a role in money laundering, such as banks, accountants, tax advisors, lawyers and notaries, are required to conduct a customer due diligence prior to providing services. That examination must determine who the client is, the purpose and intended nature of the business relationship, and sometimes also investigate the source of the (money) resources used in a transaction.
The UBO
A mandatory component of client due diligence for legal entities is the determination and identification of the UBO (“ultimate beneficial owner”), also known as the “beneficial owner. The UBO is the person who has ultimate control within and financial interest in the legal entity. Think of a shareholder with a significant interest in the capital of the company.
The UBO register
Institutions subject to the Wwft are required to establish the identity of the UBO. This includes consulting the UBO register. Data on the UBO of legal entities must be included in the UBO register, which is managed by the Chamber of Commerce, as of Sept. 27, 2020. The institution required to conduct client due diligence should not only consult the UBO Register: if it turns out that the data the institution obtained about the UBO differs from the data in the UBO Register, the institution must report this to the Chamber of Commerce.
Wwft institutions
The scope of the Wwft includes banks, investment institutions, accountants, brokers, tax consultants, lawyers and notaries.
Lawyers are not covered by the Wwft for all their work, but only if they are asked to advise, for example, on a share transaction, the incorporation or acquisition of a company or the purchase of real estate.
If you request a service from us that is subject to the Wwft, we will conduct a client due diligence and in the process we will consult the UBO register.
Questions?
In short, despite the fact that companies still have until March 17, 2022 to enter the UBO in the UBO register, Wwft filings already require us to verify who the UBO is and identify them.
If you have questions about the UBO register or a client due diligence, please contact one of our corporate law experts.
