Due to EU Directive 2015/849 (the “4th AML Directive”) and its successor, EU Directive 2018/843 (the “5th AML Directive”) the Netherlands has presented a draft bill of law on the UBO register. The purpose of this exercise is to increase the prevention of money-laundering and terrorism financing. In this alert, the main features will be highlighted.
Who needs to register?
According to this draft bill of law, the following legal entities are held to publish details of their UBO(s):
- private or public companies with limited liability (BV/NV), excluding entities that are subject to certain publication requirements for listed companies and their 100% subsidiaries
- European public companies
- European economic interest groupings
- European cooperatives
- cooperatives
- foundations (including the so-called “STAK”)
- associations (including informal associations that operate a business)
- mutual insurance associations;
- partnerships
- shipping companies
The administrative burden and responsibility of registration is with the legal entity at stake and its managing directors.
Further, the explanatory wording to the draft bill of law states that entities that have been de-registered from the Dutch Trade Register (for instance for having migrated to another jurisdiction), will need to register again with the purpose of registering the UBO.
In addition, it has been announced that a separate draft bill of law will be presented for the registration of UBOs of other entities, such as trusts, mutual funds, and other legal arrangements.
Where to register?
The Trade Register of the Dutch Chamber of Commerce shall operate the UBO register for the Netherlands, for currently also keeping the companies’ register. The UBO registers of the various EU member states will be linked to each other.
What needs to be registered?
The following details of the UBO need to be registered, to be demonstrated with underlying documents:
- Name
- Place of birth, date of birth
- Nationality
- Personal address, state of residence
- Tax identification number
- Character and scope of ownership of the UBO. The scope of ownership will be defined by “ticking” ranges varying from between 25% - 50%; 50%- 75%; 75%-100%.
However, if no individual can be identified, or if there is any doubt whether the individual identified is the beneficial owner, the individual or individuals who are part of the senior management will be considered (pseudo)UBO’s. According to the Dutch legislator, these shall be the statutory directors. Or, in the case of a partnership, the general partner(s).
Who has access to the UBO register?
The UBO register shall be publicly accessible. Although certain data shall not be disclosed to the public, for which only name, date of birth, nationality, state of residence and the character of the ownership shall be fully disclosed. Also, an UBO may object against full disclosure of his or her details. These objections may be honored in case of specific serious circumstances only, such as avoiding disproportionate risks of fraud, kidnapping, blackmailing or in case of the UBO being a minor.
When is the UBO register available?
Once the draft bill of law for implementing the Dutch UBO register has entered into force, the respective UBO(s) need to be registered within 18 months. Entities that will be incorporated after the draft bill of law has entered into force, have to register the UBO(s) instantly in registering the newly-incorporated entity. Likely, Dutch civil law notaries will arrange for such.
The UBO register is intended to be operational by 10 January 2020. However, the draft bill first needs to be approved by the Dutch parliament and senate.
What are the consequences for not complying?
Not meeting the disclosure requirements shall be an economic criminal offence and may result in monetary fines or even imprisonment. Administrative penalties may be due as well. In addition, there will be a reporting obligation in case of incorrect UBO registrations – one notifying such incorrectness, is held to report such to the Dutch Chamber of Commerce. Also, the UBO itself is held to render his/her full cooperation.
Will it work?
Always a tricky question, since the law implements a new phenomenon. However, the Dutch Tax Authorities have issued their view on the draft bill and foresee that it will be difficult to verify the correctness of all registered UBO information, especially in case sources from abroad are required. According to the DTA, persons that do not wish certain information to be registered will seek for ways in avoiding such. Concluding, the DTA states that the UBO register may be well implemented, but that enforcement will likely have limited effect.
