Luxembourg: Central Register of Ultimate Beneficial Owners
A law introducing a central register of ultimate beneficial owners (UBO) in Luxembourg will come into effect in March 2019. Robert Kimmels Managing Director takes a closer look at what this means for clients.BackgroundLuxembourg's Parliament approved a new law on 13 January 2019 on the introduction of a central register of beneficial owners of Luxembourg legal entities (the Law) in order to comply with requirements imposed by the European Union's fourth Anti-Money Laundering Directive.UBO registerThe Law introduces the obligation for the legal entities to provide certain information on their UBOs to a central register which is to be maintained by the Luxembourg Business Register (previously known as Trade and Companies Register).
The overwhelming majority of legal entities including investment funds and limited partnerships will be in the scope of the Law.Who is an ultimate beneficial owner?
UBOs are for this purpose defined as 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 the 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.
What information needs to be provided to the register?
- First name surname name nationality date and place of birth country of residence residential or professional address and national (social security) number; and
- the nature and extent of the beneficial interests held (as well as relevant supporting documentation).
The Law also introduces an obligation for a UBO in that it will be required to provide the information listed above to the directors of the legal entities so the latter may comply with its obligations.
Non-compliance with the Law may result in fines from EUR 1250 up to EUR 1250000 on the entity and/or the UBOs.What is the timeline?
The Law comes into effect on 1 March 2019 however entities will have a six months transition period and will need to be fully compliant by 1 September 2019.What we can do for our clients
We have already collected most if not all of the information required for the register in the course of collecting KYC information on our clients under existing Luxembourg AML laws as UBOs are typically already obligated to provide such information to us through a signed Declaration of Beneficial Owner form. Therefore we will be able to carry out the required registrations with minimal client contact.
If you would like more information about the register and the impact it will have on you please contact us.