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Beneficial Owner Registers

  • Philipp Zünd, Director |

Based on the 5th EU Anti-Money Laundering Directive, all EU countries had to make the registers of beneficial owners of companies accessible to the public. In the meantime, other countries have also introduced UBO Registers, for example Liechtenstein.

Background and public access

Upon the introduction of the 4th EU Anti-Money Laundering Directive, the EU member states had to introduce UBO registers in 2017. At that time, however, the EU states were not obliged to make the UBO-Registers publicly accessible. Only persons with a legitimate interest had access to the registers.

Based on the 5th EU Money Laundering Directive which came into force in July 2018, the EU member states had to make the UBO registers publicly accessible by the beginning of 2020. However, a legitimate interest is still required in order to be able to access the UBO registers for information on trusts and the like.

While in some member-states there is direct internet access to the UBO registers (e.g. in the UK), in other states access is more difficult. There is also differences in the extent of public access. The following data must be accessible to the public: name, month/year of birth, nationality, country of residence and extent of beneficial interest; in certain countries, for example, even the address of the beneficial owner can be viewed.

Persons to be documented

For companies, generally persons holding more than 25% of the shares in the company or controlling the company by other means have to be recorded as beneficial owners. If there are no such persons, the senior managing officials must be reported.

With regard to trusts, foundations and the like, the settlor, the protectors, but also the beneficiaries and other persons who control the entity must be recorded in the UBO register. In Liechtenstein, however, these persons must only be recorded if they are able to control the legal entity (see comments below).

Liechtenstein’s UBO Register

As an EEA member state, Liechtenstein also had to implement the 4th EU Anti-Money Laundering Directive and thus introduced a UBO register. This was done by enacting the Act on the register of beneficial owners of domestic entities ("Gesetz über das Verzeichnis der wirtschaftlichen Eigentümer inländischer Rechtsträger", VwEG), which came into force on 1 August 2019.

The VwEG distinguishes between companies as well as foundations, trusts and similar.

  Companies Foundation, foundation-like structured establishments and trusts
Persons to be registered

Natural persons who

  • directly or indirectly hold more than 25% of the voting rights or participate in profits with more than 25%, or
  • control the entity by other means;
  • if there are no such persons, the members of the governing body.

Natural persons who own or control the entity.

  • Settlor
    Settlors are only to be recorded if they control the trust and can therefore transfer assets to themselves. Accordingly, a deceased settlor never needs to be reported.
  • Protector
    Protectors only need to be recorded if they can transfer assets from the entity to themselves (because of the control held), which is generally not possible.
  • Beneficiaries
    Beneficiaries with a legal claim must be recorded.

    Discretionary beneficiaries, on the other hand, only need to be recorded if they can gain access to assets for themselves through control of the legal entity.

If there are no such persons, the members of the governing body (foundation board or trustee) must be recorded.

Access
  • Liechtenstein Financial Intelligence Unit, Financial Market Authority FMA and Office of the Public Prosecutor
  • Liechtenstein due diligence agents for the exercise of their due diligence obligations
  • Third parties with a legitimate interest
  • Liechtenstein Financial Intelligence Unit, Financial Market Authority FMA and Office of the Public Prosecutor

UBO registers in other countries

In the meantime, states such as the BVI, Cayman Islands, Jersey, Guernsey and Isle of Man have also introduced UBO registers. In these states, the registers are expected to become publicly accessible in 2023 - as is already the case in the EU in 2020.

Panama has also introduced a UBO register; however, it will not be made available to the public.

In contrast, there are currently no efforts to introduce a central UBO register in Switzerland. However, it remains to be seen whether Switzerland will have to take action in a few years' time due to pressure from the EU or the OECD.

Conclusion

There are other initiatives to increase transparency besides the introduction of UBO Registers, such as the EU Disclosure Rules (DAC6 ). Even though the persons involved in wealth management structures these days fully comply with local tax obligations, there are valid reasons for protecting privacy in financial matters. Against this background, it is therefore important that everyone involved in wealth management structures deal with these transparency rules in detail.