A further step to an UBO register in the Netherlands
On March 31, 2017, the Implementation Act regarding the registration of the ultimate beneficial owner of Dutch entities was made public in the Netherlands. The Implementation Act, based on the 4th Anti-Money Laundering Directive (EU Anti-Money Laundering Directive 2015/849/EU, the “AMLD4”), seeks to, among others, implement the obligation to maintain a central register containing information on ultimate beneficial owners (“UBO’s”) of entities incorporated in the Netherlands. The introduction thereof may have profound implications for the privacy of UBO’s.
In this Alert, we address the contemplated UBO register in detail based on the information currently available, and the status of implementation of the AMLD4 in the Netherlands regarding the Implementation Act.
It is expected that this legislation will come into effect on January 1, 2018 in the Netherlands. Registration of the UBO information must be made within eighteen (18) months after the Implementation Act coming into force. This means that registration of UBOs needs to be finalized on July 1, 2019 at the latest.
What is an UBO?
The Implementation Act, based on the AMLD4, defines an UBO as an individual who ultimately owns or controls a Dutch entity and/or a natural person on whose behalf a transaction is being conducted. This definition is further specified for corporate entities to include the individual(s)) who ultimately own(s) or control(s) a legal entity through direct or indirect ownership by holding a sufficient percentage of the shares, voting rights or ownership interest in such entity.
Pursuant to article 1 (f) of the Anti-Money Laundering and Anti-Terrorist Financing Act (“Wwft”)and in accordance with article 3(6)(a) of the AMLD4, the ultimate beneficial owners are the individuals who ultimately own or control (whether through direct or indirect ownership or control, including through bearer shareholdings) more than 25 % of the shares or voting rights in the company. This includes control or ownership through bearer shareholdings and other means, such as by means of an issue of certificates. This legislation does not apply to any listed companies accepted to a regulated market in the Netherlands.
On July 5, 2016 the European Commission adopted a proposal to further reinforce the EU rules on anti-money laundering to counter terrorist financing and increase transparency (5th Anti-Money Laundering Directive (“AMLD5”)). The European Commission proposes to lower to 10% the threshold set out in the AMLD4 in respect of certain limited types of entities which present a specific risk of being used for money laundering and tax evasion. However, due to the fact that the final text of AMLD5 being discussed by the European Parliament, the current provision of article 1 (f) of the Wwft will be preserved until further measures will be adopted.
The UBO register
The Implementation Act includes specific provisions on the beneficial ownership of entities and the registration thereof. Information on beneficial ownership should be held in a central register, accessible to competent authorities, financial intelligence units and, as part of mandatory customer due diligence, (financial) institutions such as banks. However, the Dutch Minister of Finance announced that the Netherlands will introduce a public register, i.e. such register will also be accessible to third parties.
The establishment of a public register means that each entity (legal entity or otherwise) incorporated in the Netherlands, such as a limited liability company (besloten vennootschap met beperkte aansprakelijkheid, B.V.), a public company (naamloze vennootschap, N.V.), a limited partnership (commanditaire vennootschap, C.V.), a cooperative (coöperatie) a partnership (vennootschap onder firma, V.O.F.), an association (vereniging) or a foundation (stichting), must register certain information about their UBO’s in the public register. The UBO register will be maintained by the Dutch Chamber of Commerce.
The managing director(s) of an entity and, in the absence thereof, the person(s) entrusted with the day-to-day management, are obligated to register the relevant UBO information at the register. The UBO is obliged to cooperate regarding this request.
Additionally, entities, such as banks, accountants, lawyers, civil law notaries, and certain authorities are required to provide information about the UBO’s to the register and notify the Dutch Chamber of Commerce in the event of any incorrect information registered and/or to adjust the same independently, depending on their responsibilities and authorities. Furthermore, any incorrect and/or any information not registered in time, shall in principle constitute an economic offense, with a penalty as a result.
Contrary to earlier draft legislation, the UBO information can only be accessed by any third party who can demonstrate a ‘legitimate interest’ (legitiem belang). The required information to be registered with respect to the relevant UBO, is:
month and year of birth;
country of residence; and
nature and approximate extent of the beneficial interest held.
Some of the details of the UBO will not be public and will only become publicly available for enforcement agencies. Such details are:
date of birth, place of birth and country of birth;
social security number (burgerservicenummer)
tax number and type;
date and place of issue identification documents; and
documentation regarding the status of the UBO.
In accordance with the AMLD4, Member States are required to ensure that the information (under paragraph 2.5. and 2.6) contained in the UBO register is accessible to the competent authorities and financial agencies (the Dutch Central Bank, the Dutch Authority for the Financial Markets ("AFM"), the Dutch tax authorities, the police, the Dutch District Attorney and the Dutch Fiscal and Investigation Service ("FIOD"), but also to entities such as banks, civil law notaries and lawyers obligated to conduct their “costumer due diligence” duties.
Exemption of access
In accordance with the AMLD4, Member States may provide for an exemption of access to all or part of the information on the beneficial ownership on a case-by-case basis in exceptional circumstances, where such access would expose the beneficial owner to the risk of fraud, kidnapping, blackmail, violence or intimidation or where the beneficial owner is a minor or otherwise (legally) incapable. In such cases, the relevant UBO information shall be shielded for the public register.
Such exemption refers to the information that is accessible as mentioned under paragraph 2.5. and 2.6. In such case, only the percentage of the shares, voting rights or ownership interest in such entity held by the UBO will be shown.
In the Netherlands, the UBO can opt for such restriction of its UBO information with the Dutch Chamber of Commerce. In such case, the UBO will be required to demonstrate and substantiate that one or more of the situations as mentioned under paragraph 2.8 above will apply to him/her once his/her UBO information is made public. During the period in which the Dutch Chamber of Commerce decides on such request, the public access to the relevant UBO information will be suspended. It is not yet clear whether remedial action can be taken in court or otherwise.
The Dutch Minister of Finance announced that the public information will be combined with four privacy guarantees:
anyone who requests information of the register will be registered;
access will not be free of charge;
not all data will be available to everyone; and
when an identifiable risk for kidnapping, blackmail, violence and/or harassment exists, a restriction of the registration of (certain) information may apply.
In addition to the above mentioned privacy guarantees, a connection with existing regulations for data protection will be sought with respect to the public availability of the UBO information. However, it is uncertain whether these guarantees will actually provide adequate protection.
The Implementation Act, recently published on March 31, 2017, has the purpose of consultation with (professional) parties in the Netherlands, and to inform the public about the proposed new regulations in order for the public to respond thereto. After the consultation period, which ended on 28 April 2017, the Implementation Act will be discussed and so amended when deemed necessary as a result of the consultation period and subsequently considered by the Lower and Upper House (Tweede Kamer en Eerste Kamer) before it will ultimately be implemented as national Dutch law.
Following such implementation, all relevant entities currently registered with the Chamber of Commerce must register their UBO information within eighteen (18) months. Newly incorporated companies, incorporated after the Implementation Act came into force, will be obligated to immediately register their UBO information upon their registration with the Dutch Chamber of Commerce.
As soon as the Dutch legislator takes any further steps regarding the implementation of the AMLD4 we will update you on the subject matter.
QUESTIONS OR FURTHER INFORMATION
If you have any questions or appreciate receiving more information on this Alert, please contact your regular contact at WLP-Law or any of the undersigned:
For Legal matters
Neill André de la Porte at email@example.com or at (31) 62611 2772.
Maarten van Buuren at firstname.lastname@example.org or at (31) 65244 1991.
This alert is intended to highlight issues for general reference only. It is not comprehensive nor does it constitute legal, tax or financial advice. Any information contained herein is subject to change at our discretion. This information should not be relied upon in any specific factual or legal situation and does not cover all laws or regulations that may be applicable. You should seek professional advice before making use of any of the information. WLP-Law gives no warranty as to the accuracy or completeness of this information. No liability whatsoever is accepted by WLP-Law in this respect. This alert relates to Netherlands law only.
WLP-Law is located at De Boelelaan 32-3, 1083 HJ Amsterdam, the Netherlands. For more info, please visit us at www.wlp-law.com.
On July 5, 2016 the EU published a 5th Anti-Money Laundering Directive (“AMLD5”), which has yet to be implemented. However, the Implementation Act has taken AMLD5 into account where possible.
 Directive (EC) 2015 /849 of May 20, 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing  OJ L141/73. Art. 3 (6).