The European Union's Directive 2015/849, better known as the 4th Anti-Money Laundering Directive, regulates prevention of the use of the financial system for the purposes of money laundering or terrorist financing. As such, Articles 30 and 31 of the 4th Anti-Money Laundering Directive introduce the requirement for each member state to establish beneficial ownership registers.
For this purpose, the Luxembourg Ministry of Justice filed the draft bill of law n°7217 on 6 December 2017 (Bill 7217) before the Chamber of Deputies. Bill 7217 establishes an electronic central register of beneficial owners for the legal entities registered with the Luxembourg Trade and Companies Register, also called the RBE. Bill 7217 was approved on 18 December 2018 by the Luxembourg Parliament and then published in the Luxembourg official gazette on 15 January 2019 (RBE Law). The RBE Law will enter into force on 1 March 2019 with a six months transitional period to comply with these new obligations.
With this new mechanism, entities falling within the scope of the RBE Law are now required to obtain and hold information about their beneficial owners, which they must provide to the Luxembourg Business Registers in order to keep the RBE updated.
What is the RBE?
The Registre des Bénéficiaires Effectifs (RBE) is a new central register created for the maintenance and provision of information regarding ultimate beneficial owners of Luxembourg legal entities. RBE will be managed and monitored under the control and supervision of the Luxembourg Business Registers on behalf of the Luxembourg Ministry of Justice.
What is the scope of application of the RBE Law?
Which companies are required to submit to RBE?
All legal entities registered with the Luxembourg Register of Trade and Companies (Registre de Commerce et des Sociétés) as mentioned in Articles 1.2)° to 1.15)° of the law of 19 December 2002 as revised (e.g., Luxembourg civil and commercial companies, SCSps, mutual funds, Luxembourg branches of foreign entities, etc.) will be required (i) to obtain and hold information on their beneficial owners and (ii) to provide this information to the RBE.
Companies listed on regulated market (in the European Economic Area or in a third country providing equivalent transparency requirement) are exempt from the obligation to declare their beneficial owners. They are only required to disclose the name of the regulated market(s) on which their securities are admitted to trading.
Who is a beneficial owner?
The RBE Law refers to the definition of beneficial owner under the Law of 12 November 2004 on the fight against money laundering and terrorist financing (AML Law). In accordance with the AML Law, a beneficial owner is any natural person who ultimately owns or controls an entity and/or any natural person through direct or indirect ownership of a sufficient percentage of shares or voting rights or ownership interest in that entity, including through bearer shares, or through control via other means on whose behalf a transaction or activity is conducted, which includes:
A shareholding of 25% plus one share or an ownership interest of more than 25% in the customer held by a natural person shall be an indication of direct ownership.
A shareholding of 25% plus one share or an ownership interest of more than 25% in the customer held by a corporate entity, which is under the control of a natural person(s), or by multiple corporate entities, which are under the control of the same natural person(s), shall be an indication of indirect ownership.
If no beneficial owner is identified after having exhausted all possible means and provided there are no grounds for suspicion, any natural person holding the position of a senior management (dirigeant principal) should be identified as the beneficial owner in the RBE.
Who can request access to RBE?
Any person, whether or not residing in Luxembourg, can get access to the information held in RBE without having to prove any legitimate interest or ask for a prior authorization by a competent organ.
However, the RBE Law allows a beneficial owner or a registered entity to request that the access to such information be limited to only national authorities, banks, financial institutions or notaries performing their duties. Such request must be duly motivated and addressed to the Luxembourg Business Registers. This limitation will be granted in exceptional circumstances for a maximum period of three years where the beneficial owner has (i) a disproportionate risk, (ii) a risk of fraud, (iii) kidnapping, (iv) blackmail, (v) violence, (vi) intimidation, or where the beneficial owner is either a juvenile or legally disabled.
The information delivery procedure?
What information is requested by the RBE Law?
Each company submitted to registration in the RBE is required to provide its registered office in Luxembourg with the name, nationality, place and date of birth, personal or professional address, and identification number (as applicable) of its beneficial owners, as well as the nature and extent of the participation they hold in it.
The national authority would have access to all the information, while the full private or professional address and identity card/passport of the beneficial owner won’t be publicly available.
This information must be adequate, sufficient, accurate and up-to-date and must be justified by the relevant documentation. This information must be filed electronically on a specific platform within one month from the moment when the entity has become aware or should have become aware of the event requiring the registration or modification of information.
Who is responsible for providing the requested information?
The company, its domiciliation agent or the notary in charge of the incorporation or the amendment of the articles of association can collect the information and file it with the RBE. Each of those responsible could be asked by the relevant register to provide any requested information regarding a beneficial owner if such information needs to be updated. In this case, the information should be filed no later than one month following the change of situation.
Any person having access to the RBE is also required to inform the Luxembourg Business Registers of any inaccurate or false information registered in the RBE, within a period of 30 days from that finding.
Sanctions for deficient information:
Any beneficial owner subject to the RBE Law that fails to comply with its obligations is subject to a criminal fine ranging from 1,250 euros to 1.25 million euros depending on the seriousness of the infringement.
In addition, any registered entity subject to the RBE Law that fails to request for information or to update its beneficial owner(s) in the RBE is subject to a criminal fine ranging from 1,250 euros to 1.25 million euros.
Special thanks to Ms. Sabrina Blel for her contribution to this article.