The “new” transparency register !
On 01 August 2021, the new Transparency Register and Financial Information Act (“TraFinG”) came into force.
This amendment reorganizes and restructures the Money Laundering Act (“GwG”). The reform of the Money Laundering Act means that the beneficial owners of almost all legal entities in Germany must be entered directly and immediately in the transparency register.
What has changed in the transparency register?
Until the TraFinG came into force on August 1, 2021, Section 20 (2) AMLA provided for a so-called notification fiction.
This meant that if the required information on the beneficial owner was already available completely and correctly from other electronically retrievable registers, such as the commercial register or the partnership register, no notification to the transparency register was required. The transparency register was thus regarded as a “catch-all” register.
§ However, Section 20 (2) of the German Money Laundering Act (GwG) and thus the notification fiction have been abolished by the reform of the Money Laundering Act. As a result, the transparency register will immediately become a “full register” containing “a quantitatively comprehensive and high-quality database on the beneficial owners of all entities subject to transparency requirements” (cf. Federal Government Draft Law of March 31, 2021, BT Drucksache 19/28164, p. 2). The elimination of the notification fiction means that all legal entities under private law and registered partnerships must register in the transparency register.
If the legal entities benefited from the notification fiction prior to the reform of the Anti-Money Laundering Act, these companies must have a corresponding entry made in the transparency register within the following transition periods:
- Stock corporation, SE, partnership limited by shares until March 31, 2022.
- Limited liability company (GmbH), cooperative, European cooperative or partnership by June 30, 2022,
- In all other cases, by December 31, 2022 at the latest.
For the companies affected by the notification fiction, it is sufficient to submit the current status of the beneficial owner to the Transparency Register. For all other companies, a complete registration of the beneficial owners from October 01, 2017 to date is required.
During the transition periods outlined above, fine provisions and obligations to submit discrepancy reports are suspended. It should be noted, however, that the transition periods only apply to those companies that were not required to report under the previous legal situation due to the exceptions and reporting fictions. Newly established companies or companies that have not reported for other reasons must do so without delay.
Although the Transparency Register has been in existence since October 01, 2017, not all companies subject to the reporting obligation have yet submitted their beneficial owners to the Transparency Register. For this reason, we summarize the most important information on the Transparency Register for you once again:
Background to the Transparency Register?
The Transparency Register is a register for recording and making available information about the beneficial owner.
It is based on a European directive which came into force on October 01, 2017 and is used to disclose the beneficial owners of legal entities under private law and registered partnerships.
It is intended to prevent money laundering and terrorist financing.
Who must report to the Transparency Register?
Pursuant to Section 20 (1) AMLA, legal entities under private law (e.g. limited liability companies, stock corporations, registered associations, legally capable foundations) and registered partnerships (limited partnership, general partnership, partnership), as well as, pursuant to Section 21 AMLA, non-legally capable foundations, trusts and comparable legal structures, are obliged to disclose their beneficial owners to the Transparency Register.
The only company that does not have to disclose its beneficial owner to the transparency register is the civil-law partnership (GbR).
Who is the beneficial owner?
According to Section 3 AMLA, beneficial owners are natural persons in whose ownership or under whose control the relevant association ultimately stands.
In the case of legal entities under private law and registered partnerships, Section 3 (2) AMLA defines natural persons as beneficial owners who are directly or indirectly
- Own more than 25% of the capital,
- Control more than 25% of the voting rights, or
- Exercise control in a comparable manner (e.g. general partners, veto rights)
The obligation to disclose the beneficial owner also applies to indirect shareholdings. An indirect shareholding means a shareholding that is not held directly but through intermediary persons, investors or companies. In such a case, the indirect beneficial owner is the person who controls the parent association within the meaning of Section 3 (2) sentences 2 to 4 GwG in conjunction with Section 290 (2) to (4) HGB. As a rule, capital shares or voting rights of more than 50% are required for control.
The information to be provided includes the name, date of birth, place of residence and all nationalities of the respective beneficial owner, but in particular also the nature and extent of the beneficial interest held by him.
If a natural person cannot be identified as the beneficial owner, for example due to a chain of ownership of several legal entities, the legal representative, i.e. in particular the managing director or board member, of the legal entity must be reported as the so-called fictitious beneficial owner.
What are the legal consequences of a breach of the reporting obligation?
Violations of the reporting requirements constitute an administrative offense that can generally be punished with fines of up to 150,000.00 euros. In the case of particularly serious, repeated or systematic violations, the fine can also be considerably higher.
The Federal Administrative Office is unfamiliar with a warning as a preliminary stage of fine proceedings. This does not mean that a fine is automatically imposed in all cases. Rather, it is examined on a case-by-case basis whether the imposition of a fine is appropriate in the respective subject matter of the proceedings.
For the transitional periods outlined above, fines will be temporarily suspended for missed initial notification. However, this should not be a reason to deal with the issue sufficiently.
Your ACCONSIS contact person
Neele Schröder
Lawyer
Focus commercial and company law
Service-Phone
+49 89 547143
or by e-mail
n.schroeder@acconsis.de
My recommendation
Even if many companies are currently still affected by the notification fiction, I urgently recommend checking whether the obligations under money laundering law are fulfilled within the framework of the corporate structures and whether a notification to the transparency register must be made.
Especially in the case of complex corporate structures, a comprehensive determination of the beneficial owner should not be neglected.
If the obligation to notify the transparency register is not fulfilled, there is already a risk of fines being imposed by the Federal Office of Administration. With the entry into force of the Transparenz-Finanzinformationsgesetzes Geldwäsche (TraFinG Gw), such a determination and the subsequent entry in the transparency register can no longer be dispensed with anyway!
If you have any questions, please contact me.
I will be happy to support you!