A new law of 13 January 2019 establishing a Register of Beneficial Owners (RBE) for Luxembourg registered entities was published on 15 January 2019 in the Luxembourg Official Gazette (Mémorial A) (RBE Law).
The RBE Law implements Article 30 of Directive (EU) 2015/849 of the European Parliament and of the Council of 25 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (4th AML Directive), as amended by Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending the 4th AML Directive, and amending Directives 2009/138/EC and 2013/36/EU (5th AML Directive) with respect to (i) the obligations of the covered entities to obtain and hold information on their beneficial owners (UBOs) at their registered office and (ii) the obligation for Luxembourg to put in place a register of UBOs including adequate, accurate and up-to-date information accessible to the public and to the Luxembourg authorities within the scope of their duties.
It must be noted that bill of law n°7216 regarding the creation of a central register of UBOs for fiduciary arrangements and implementing Article 31 of the 4th AML Directive was split in two bills of law (bill of law n°7216A, relating to the information to be obtained and held by the fiduciary agent, and bill of law n°7216B relating to the establishment of a register of UBOs for Luxembourg fiduciary arrangements, respectively). On 26 July 2018, bill of law n°7216A was adopted by the Luxembourg Parliament and gave rise to the law of 10 August 2018 on the information to be obtained and held by the fiduciary agent, which was published on 21 August 2018 in the Luxembourg Official Gazette (Mémorial A).
The present newsletter aims to provide a general overview of the provisions of the RBE Law that will apply as from 1 March 2019.
A. What entities are covered by the RBE Law?
All entities registered with the Trade and Companies Register (RCS), including, but not limited to:
- public limited liability companies (sociétés anonymes) and private limited liability companies (sociétés à responsabilité limitée); and simplified joint stock companies (sociétés par actions simplifiée), except commercial temporary companies (sociétés commerciales momentanées) and commercial companies by participations (sociétés commerciales en participation);
- corporate partnerships limited by shares (sociétés en commandite par actions), common limited partnerships (sociétés en commandite simple) and special limited partnerships (sociétés en commandite spéciale);
- Luxembourg branches of foreign companies;
- all mutual funds (fonds communs de placement);
- non-profit associations (associations sans but lucratif);
- foundations (fondations);
- civil companies; and
- interest groupings (groupements d'intérêt économique) and European interest groupings (groupements européens d'intérêt économique).
B. What does "beneficial owner" mean?
The RBE Law takes over the definition of the UBO as already provided for by the amended law of 12 November 2004 on the fight against money laundering and terrorism financing (AML Law), which defines a UBO as "any natural person who ultimately owns or controls the customer or any natural person on whose behalf a transaction or activity is being conducted".
In the case of companies:
- 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 or indirect ownership (if through a corporate entity);
- if no natural person can be identified as a beneficial owner in accordance with the above criteria, or if there is a doubt as to whether the identified persons are the UBOs, the natural person acting as the main manager (dirigeant principal) shall be identified.
C. What are the main new obligations?
For the registered entities (and their management body):
- obtaining and holding at their registered office, in an internal file, adequate, accurate and up-to-date information and supporting documentation (please see more details below) on their UBO(s);
- filing the relevant information and supporting documentation at the RBE within a month after the registered entity has become aware or should have become aware of the event requiring the registration or modification of the information;
- upon simple request, and within three business days, providing such information and information on its owner, to the national authorities listed in the RBE Law (e.g., state prosecutor, Commission de Surveillance du Secteur Financier, tax authorities, etc.);
- upon a duly justified request, and within three business days, providing such information (other than the private or professional address, and the identification number of the UBOs) and information on its owner, to the professionals listed in Article 2 of the AML Law (e.g., credit institutions, professionals of the financial sector, lawyers, notaries, etc.) in the framework of the performance of their customer due diligence measures as laid down in the AML Law; and
designating the place where the information and the supporting documents will be kept for a period of five years from the date on which the registered entity has been removed from the RCS, in case of a dissolution. The designation of the place of storage shall be published in the Recueil Electronique des Sociétés et des Associations.
For each UBO of the registered entities:
- providing the registered entity with all of the information required by the RBE Law so that the latter may comply with its obligations thereunder.
D. What information must be filed with the RBE?
The following information shall be electronically filed with the RBE for each UBO:
- family name and first name(s);
- date (day, month and year) and place of birth;
- citizenship(s) and country of residence;
- precise private or professional address;
- identification number for the individuals registered in the national register of natural persons (Registre National des Personnes Physiques) / foreign identification number for the non-resident individuals; and
- nature and extent of beneficial interest held in the registered entity.
Companies listed on a regulated market in Luxembourg, or in another Member State of the European Economic Area or in another third country that imposes obligations recognized as equivalent by the European Commission within the meaning of Directive 2004/109/EC remain within the scope of the RBE Law. However, such companies will only have to file with the RBE the exact name of the regulated market(s) on which their securities are admitted to trading.
The filing request shall also include certain supporting documents. Technical aspects, such as the list of such documents, the filing process thereof and the fees paid to the Luxembourg business register GIE, will be determined by way of Grand Ducal regulation.
E. Who will be granted access to the RBE?
The RBE will be made electronically available to:
- national authorities (as listed in the RBE Law), with full access; and
- any person (whether residing in Luxembourg or not and without having to demonstrate a legitimate interest), with a limited access (i.e., all information except the private and professional address and the national or foreign identification number of the UBOs).
In exceptional circumstances, the registered entity or a UBO may request that the access to the information filed with the RBE be limited for a maximum period of three years (possibly renewed upon a duly justified request). This may apply if the UBO is exposed to a disproportionate risk, a risk of fraud, kidnapping, blackmail, violence, intimidation, or where the UBO is either a minor or legally incapable. In such a case, the access to the relevant information will be limited to the national authorities, credit and financial institutions, public notaries and bailiffs.
F. When will the RBE Law enter into force?
The RBE Law will enter into force on 1 March 2019.
However, registered entities are granted a six-month transition period as from the entry into force of the RBE Law to comply with its provisions. The RBE will be available for consultation at the end of this six-month period.
G. What are the sanctions in the case of infringement of the RBE Law?
For the registered entities: criminal fines ranging from EUR 1,250 to EUR 1,250,000 shall be imposed on any registered entity not complying with the obligations to obtain and hold the required information on their UBOs and file, within the legal timeframe, such information (and supporting documents) to the RBE or having voluntarily provided inaccurate, incomplete or obsolete information on their UBOs.
For the UBOs: the criminal fines above apply to the UBO where he/she fails to provide the required information allowing the registered entity to satisfy its obligations under the RBE Law.