The register information is cross-checked by professionals using the register, such as banks, notaries and lawyers
The Luxembourg register of beneficial owners becomes operational from 1 March, as part of an EU crackdown on money laundering. What is it and who checks that it is correct?
Luxembourg may have missed the June 2017 deadline for implementing the fourth anti-money laundering directive (AMLD4) but when the Luxembourg register of beneficial owners goes live, it will be ahead of the game in some areas.
According to justice ministry employee and board head of the Luxembourg Business Registers Daniel Ruppert, the beneficial owners register will meet the conditions of the fifth AMLD, the deadline for which is 10 January 2020.
“We said that we would transpose the two directives in one text,” he told Delano in February. The LBR is an economic interest group which employs around 30 people and manages the companies’ register.
From 1 March beneficial owners of all Luxembourg commercial companies and legal entities registered with the trade and companies’ register must disclose their identity, date and place of birth, nationality, private or professional address of residence, and the nature and extent of their interests in the entity.
“The register will be fully automated, running through the internet interface as is the case for the companies’ register,” Ruppert said. “There are different checks foreseen by the regulation.”
The information is cross-checked by professionals using the register, such as banks, notaries and lawyers. “All of these kinds of professionals are still obliged to do their own checks when entering into a relationship with a customer,” Ruppert said.
“If they notice a discrepancy, they have to report it to the LBR so it can make a check on the entity to check whether it’s been updated.”
Failure to provide the necessary information or update it can lead to fines from €1,250 to €1.25m.
During the first six months from 1 March 2019, companies will not be charged to register their beneficial owners. After that grace period, there will be a fee for registering and making changes.
AML4 has been lauded by transparency activists, because its data can be made accessible upon request to the wider public, subject to the approval of a formal commission within the justice ministry. However, the Tax Justice Network’s Andres Knobel writes in his speakers’ corner for Delano, to be truly effective, the register should cover all legal vehicles including trusts. Knobel also questions the efficiency of the cross-checking procedures in place.