A law of 18 September 2017 provides for the creation of a centralized register of ultimate beneficial owners (‘UBO’) in Belgium. The royal decree determining the operating procedures of this register was enacted on 30 July 2018 and all Belgian companies are legally required to register information about their ultimate beneficial owners before 30 November 2018. However, the Ministry of finance has announced via its website that this deadline was postponed to 30 September 2019.
In the context of the fight against money laundering and terrorism financing, the Belgian law of 18 September 2017 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and limitations to the use of cash provides for the creation of a centralized register of ultimate beneficial owners (‘UBO’) (1) implementing a European requirement set forth in the fourth and the fifth European AML Directives (2) (the “2017 AML Law”).
The 2017 AML Law does not however cover the operating procedures of such register, which had to be set out by Royal Decree.(21) In this framework, the royal decree of 30 July 2018 on the operating procedures of the UBO register was published in the official State Gazette on 14 August 2018 (the “Royal Decree”).
The set of rules contained in the Royal Decree (that will enter into force on 31 October 2018) aim to ensure efficient transparency of ownership structures of legal entities and thus to more effectively fight against money laundering and the financing of terrorism, which are the main objectives of the 2017 AML Law. The idea is to create a centralized database containing the identity of all the persons who control or possess, among others, Belgian companies.(3)Furthermore, the establishment of this register allows for Belgium to comply with the recommendations of the Financial Action Task Force (FATF) and to meet the requirements and work undertaken with the Tax transparency requirements of the OECD.
Belgian companies, among others, are required to gather and hold adequate, accurate, and current information on their beneficial owners. In this context, relevant information must be provided to the UBO register (operated under the authority of the Belgian Ministry of Finance) within one month from the moment such information is known or amended.
According to the AML Law and the Royal Decree, companies need to submit the relevant information for the first time by 30 November 2018. However, the Ministry of finance (SPF Finance – FOD Financiën) has announced via its website that this deadline was postponed to 30 September 2019.
What is covered under the concept of “Ultimate Beneficial Owner”?
‘Ultimate Beneficial Owner’ (bénéficiaire effectif) means any natural person(s) who ultimately owns or controls a corporate or a legal entity(4)or the delegate of such entity and/or the natural person(s) on whose behalf a transaction or activity is being conducted(5).
In case of Belgian companies, the following categories of persons qualify as “Ultimate Beneficial Owner”:
(1). Natural person(s) who ultimately own(s) or control(s) the entity through direct or indirect(6)ownership of a sufficient percentage of the voting rights, shares, or other ownership interests therein. In this respect, holding more than 25% of the voting rights or shares or corporate capital shall serve as an indication of a sufficient percentage.
(2). Natural person(s) who control(s) the company by any other means, for instance individuals holding the power to appoint or remove a majority of members of the administrative body or to effectively control the company through a shareholder agreement, or individuals having veto rights, etc.;
(3). Or, when no beneficial owner could be determined under the criteria of points a) and b) (e.g. in the case of a listed entity or subsidiary of a group the ultimate holding structure of which is listed) or if there is any doubt that the person(s) identified are the beneficial owner(s), natural person(s) who hold the position of senior managing official(s) (CEO, Chairman of the management committee, etc.).
As the individual(s) referred to under this point iii) remain(s) a residual category, the identification of such beneficial owner(s)should be duly documented and substantiated (e.g. steps undertaken to identify the two first categories of beneficial owners, the result of the searches performed, etc.)
What information must be provided?
The required disclosure process entails that the following indications be provided to the UBO register with respect to each of the beneficial owners(8):
- last name;
- first given name;
- date of birth;
- month of birth;
- year of birth;
- country of residence;
- full address of residence;
- date on which the natural person became beneficial owner of the company;
- identification number in the Belgian National Register or of the social security register or any similar identifier issued by the State where the person resides or of which they are a national;
- category of beneficial owner to which the relevant individual belongs (see categories listed in the definition of beneficial owner);
- indication if the threshold is met by the person individually or jointly with other beneficial owners;
- indication if the person is a direct or indirect beneficial owner;
- in case of indirect beneficial ownership, detailed information regarding intermediaries (e.g. number of intermediaries and, also for each intermediary, the full identification, including at the latest, name, incorporation date, trade name, legal form, corporate address and registration number (or any other similar identifier issued by the State in which the intermediary is registered); and
- extend of the beneficial interest held by the beneficial owner.
Documentary evidence must be attached to the registration (if necessary and at the discretion of the person liable for registration: copy of the ID card / passport, articles of association, shareholders’ register, notarial deed, etc.).
Responsibility, process, and sanctions
Directors or legal representatives of any company incorporated in Belgium are required to provide the relevant information to the UBO register, as already stated above, by 30 September 2019 at the latest, through the online platform “MyMinFin”, access to which requires a Belgian ID card.
This information must be updated and/or confirmed every year.
Failure to collect, hold and record requisite UBO information or providing incorrect or incomplete information may expose the directors and, as the case may be, members of the company’s statutory body, management committee and persons forming part of its senior management of the company responsible for the infringement(9) to administrative sanctions(10). The directors may also be subject to criminal(11) sanctions in this respect.
Criminal fines may range from EUR 400 to 40,000 euros while administrative fines may vary from EUR 250 to EUR 50,000.
From a data-protection perspective, the company also has to provide, on a durable medium, its beneficial owners with information in relation to the disclosure of their data to the UBO register, such as the fact (i) that it has the obligation to provide the register with all the items referred to under points 1 to 15 above and that this information will be recorded and kept in the register for 10 years after the loss of the legal personality of the company or the definitive cessation of its activities; (ii) that they can access said information and (iii) if applicable, that they can request the UBO register authority to delete or amend any inaccurate information. In this context, the name and address of the service in charge of managing the register with the Treasury Administration should also be provided to the beneficial owners.(12)
Access to the information contained in the UBO register
Access to the UBO register is open to anyone but with different access rights, which may be divided into three categories:
(i) public authorities vested with the enforcement of anti-money laundering rules (such as the Belgian tax authority);
(ii) obliged entities (entités assujetties)(13), whether public or private, that are required to apply the anti-money laundering rules in the context of the professional services provided (e.g. National bank of Belgium, fund of deposit and consignment, bpost, credit institutions, lawyers, auditors, etc.); and
(iii) members of the public(14). Unlike the first and second categories, members of the public will only have access to the last name, month and year of birth, nationality, country of residence, and nature of the ownership (items 1, 4 to 7, 9 and 11 to 15 listed above).(15) Furthermore, they will need to conduct the search based on a company’s registration number or name. This means that no general search for a specific individual can be carried out.
Interestingly, the Royal Decree seems to go beyond the requirements of the fourth AML Directive in this respect, which requires any person of this category “to demonstrate a ‘legitimate interest’ with respect to money laundering, terrorist financing, and the associated predicate offences, such as corruption, tax crimes and fraud, […], in accordance with data protection rules”.(16)
This ‘lack to require the demonstration of a legitimate interest’ is the direct result of Belgium already partially implementing the Fifth AML Directive which, however, only needs to be implemented by January 2020.(17)
It is important to note that neither the company nor its beneficial owner(s) will be informed of the searches conducted about them in the UBO register. The Treasury Administration must however ensure that searches conducted on the UBO register be recorded and kept for a period of 10 years.(18)
Under exceptional and duly motivated circumstances, beneficial owners may request that all or part of the information relating to them be limited and kept confidential in order to safeguard their security or personal privacy (e.g. the beneficial owner is a minor or may be exposed, in case of disclosure, to disproportionate risks such as fraud, blackmailing, extortion, violence, etc.).(19)
Practical advice for Belgian companies: how to be prepared?
Directors of Belgian companies must be prepared for the 30 September 2019 and thus, if they haven’t yet, collect the relevant information on their beneficial owners.
To this end, they should
- identify their ultimate beneficial owner(s) and the category to which they belong;
- request the identification data of each ultimate beneficial owner;
- request their identification data of all intermediaries, if applicable; and
- identify a legal or authorized representative (i.e. manager, director, or special proxy) who has a Belgian ID card and who will record and fill in the above-mentioned information with the UBO register via the Treasury Administration’s online platform MyMinFin(20)on behalf of the company.
Moreover, it is recommended that companies already start with the implementation procedures within their internal organization so that they can obtain, hold, and record adequate, accurate, and up-to-date information on their beneficial owners at any time and be able to inform the UBO register of any change or to confirm this information annually.
|↑1||Article 73 of the 2017 AML Law.|
|↑2||Article 30 of the European Directive 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC, OJ L 141, 5.6.2015, p. 73–117 (commonly referred to as the ‘Fourth AML Directive’) and Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU (Text with EEA relevance), OJ L 156, 19.6.2018, p. 43–74 (commonly referred to as the “Fifth AML Directive”).|
|↑3||Report to the King concerning the Royal Decree on the operating procedures of the UBO register, M.B., 14 August 2018, p. 64620.|
|↑4||The obligation to disclose the relevant information regarding UBOs also applies to Belgian companies, non-profit associations (whether national or international), foundations, trusts, or similar legal entities. However, this article will only focus on the rules applicable to Belgian companies.|
|↑5||Article 4, first subparagraph, 27, a) of the 2017 AML Law.|
|↑6||Indirect means though one or more entity/entities that is/are controlled by the same individual(s).|
|↑7||The categories of UBOs listed under points (i) and (ii) are cumulative. Belgian companies must therefore indicate who is considered UBO and the category to which they belong. If a person belongs to more than one category, separate registrations should be made by category.|
|↑8||According to the combined reading of article 3 §1 of the Royal Decree, article 74 §1 of the 2017 AML Act and articles 14/1 and 14/2 of the Companies Code.|
|↑9||The Minister of Finance shall hear or at least convene the alleged wrongdoer in this respect and will take into consideration the circumstances surrounding the non-compliance when issuing the administrative fine.|
|↑10||Article 18 of the Royal Decree.|
|↑11||Article 14/2 of the Companies Code.|
|↑12||Articles 21 to 23 of the Royal Decree.|
|↑13||As defined in article 4, subparagraph 1, 18° of the 2017 AML Law|
|↑14||Elke burger/tout membre du grand public (Article 6 of the Royal Decree).|
|↑15||Article 9 of the Royal Decree.|
|↑16||Recital 14 of the Fourth AML Directive.|
|↑17||Recital 53 of the Fifth AML Directive.|
|↑18||Article 15 of the Royal Decree.|
|↑19||Article 16 of the Royal Decree.|
|↑21||Articles 74 and 75 of the Royal Decree.|