On 6 December 2017, Luxembourg’s Finance and Justice Ministers presented two new draft laws (n°7216 and n°7217) implementing two distinct registers of Ultimate Beneficial Owners (UBOs). There will be a central register for the UBOs of legal entities and, separately, a central register for trusts and fiduciaries. The main purpose of these new proposed rules is to align Luxembourg’s regulations with the international requirements in terms of legal persons’ transparency. The focus is on two main reporting obligations:

1. the obligation to obtain and keep up-to-date information on the beneficial owners in a central register
2. the obligation for companies/legal entities and trusts/fiduciaries to obtain and keep updated information on their own beneficial owners

The registers were required to be implemented in every Member State before 26 June 2017 (i.e. articles 30 and 31 of the 4th Anti-Money Laundering Directive [AMLD] 2015/849) to prevent money laundering and the financing of terrorism. After almost 5 months’ delay and while negotiations on a 5th Laundering Directive are underway, Luxembourg finally put forward a bill, following the example of some neighbouring countries – such as Belgium, the UK, Germany or the Netherlands – who had already taken steps to be in line with the EU provisions.

According to the 4th AMLD transposed into Luxembourg law (art. 1, §7 of amended law of 12 November 2004 against ML/FT), a UBO is any natural person who ultimately owns a sufficient percentage of shares of a legal entity through direct or indirect ownership or has formal or effective control over a legal entity (shareholding or ownership of more than 25%). If no person with this profile can be identified or if there is any doubt that the person(s) identified are the beneficial owner(s), then the person falling under the definition is/are the person(s) holding the position of the senior manager of the legal entity.

Register for companies and legal entities

Companies and legal entities will have to provide the “Groupement d’intérêts économiques du Registre de commerce et des sociétés” (RCSL) with information about their UBOs: first name(s) and name, nationality(-ies), date of birth, place of birth, country of residence, address, and identification number.
Access to this information will be restricted and monitored:

• National authorities competent in the fight against AML and the financing of terrorism will have access to all the information. 
• National professionals competent in the fight against AML and the financing of terrorism, staff members of prosecution service (including the Bar Association) and autoregulation organisations will have access to partial information (no access to address or identification number). 
• Other resident persons or organisations having a legitimate interest will have access to partial information (no access to address, date of birth, place of birth, or identification number) upon request. The notion of “legitimate interest” is not defined in the draft law and will be left to the discretion of a coordinating commission, established at the Ministry of Justice, who will then decide on a case-by-case basis. A refusal can be appealed.
  
  

The draft law also foresees an access restriction in cases of fear of fraud, kidnapping, blackmail, violence, or intimidation, or if the UBO is a minor.

Acting within the scope of its mission, the RCSL ensures the update of the data and is granted the power to control the accuracy of the information listed, including criminal penalties ranging from €1,250 to €1,250,000.

Register for trusts and fiduciaries

Trusts and fiduciaries will have to provide the “Administration de l’enregistrement et des domaines” (AED) with similar information about their UBOs. This information will only be accessible by national authorities competent in the fight against AML who will have access to all the information.

The supervisory authorities and the AED ensure the accuracy of the data and are granted an arsenal of administrative sanctions, including warnings, public declarations, periodic penalty payments, and fines ranging from €250 to €250,000.

Comparison between the two registers

The comparative table below highlights the main characteristics and differences of the two different registers.

	Bill n°7217 ENTITIES	Bill n°7216 TRUSTS/FIDUCIARIES
For whom?	companies and legal entities (excluding listed companies)	trusts/fiduciaries established in Luxembourg and who generate tax consequences
Authority in charge of the register	registre de commerce et des sociétés	administration de l’enregistrement et des domaines
Who has access to the register’s information?	national authorities national professionals, staff members of prosecution service, and autoregulation organisations other resident persons or organisations having a legitimate interest under request	national authorities
Type of information	information on the UBOs (first name[s] and name, nationality[ies], date of birth, place of birth, country of residence, address, and identification number)	attributed registration number and date of conclusion of the trust fiduciary agreement information on the settlor, trustee(s), protector, beneficiaries, and any person exercising effective control over the trust (same as for UBOs of companies/legal entities) information on companies (company name; address of the headquarters; registration number)
How to access the information	electronically (electronic or paper version extracts)	electronically
Access limitation	national authorities: unlimited information autoregulation authorities: partial information professionals and/or 3rd parties with legal interest: partial information restricted access in case of fear of fraud, kidnapping, blackmail, violence, or intimidation, or if the UBO is a minor	national authorities: unlimited information
Conservation of the information by the entities	companies/legal entities must: obtain and keep records of the information on their UBO as described above. provide information on their legal owner to national authorities.	trusts/fiduciaries must: obtain and keep records of the information on the settlor, trustee(s), protector, beneficiaries, and any person exercising effective control over the trust/fiduciary. be able to identify the beneficiaries. supervisory authorities are responsible for ensuring accuracy and respecting the above obligations.
Sanctions	criminal fines can be given ranging from €1,250 to €1,250,000 for companies and legal entities. criminal sanctions can be given to non-compliant registered entities, autoregulation organisations and professionals (who requested the information out of the scope of their supervision activities).	the AED has the power to apply: periodic penalty payments (max. €1,250/day with a maximum amount of €25,000 in total). administrative sanctions (warnings, public declarations, etc.) administrative fines ranging from €250 to €250,000. the supervisory authorities can apply the same sanctions as the AED within the exercise of their supervision mission.