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Fictitious beneficial owner - reporting obligations

Which AMLA obligations must be observed for the fictitious beneficial owner? Fictitious beneficial owner - reporting obligations: The most important obligations at a glance:

  1. Introduction of fictitious beneficial owners
  2. Beneficial owner of free float
  3. What obligations must be observed in the case of foundations and trust structures with legal capacity?
  4. Scope of the recording and reporting obligations according to the AMLA for fictitious beneficial owners
  5. DK information on the Fourth EU Anti-Money Laundering Directive (as of November 20, 2017)
  6. Changes with implementation of the 5th EU Anti-Money Laundering Directive

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Introduction of the term fictitious beneficial owner - Money Laundering Act - fictitious beneficial owner - reporting obligations

If, after a comprehensive examination, no beneficial owner can be determined or there are doubts that the identified person is actually the beneficial owner and there are no facts that would trigger a reporting obligation, the legal representative, the managing partner, applies qua fiction or the partner of the contractual partner as beneficial owner (so-called fictitious beneficial owner).

In addition, the definition will be adapted to the requirements in Article 3 Number 6 of the Fourth Anti-Money Laundering Directive, which in turn follows the FATF requirements: After that, comprehensive tests are first required to determine whether a natural person is the owner of a legal person or in some other way Exercises control over them. Only if no natural person can then be determined as the beneficial owner (either because no such person exists or the structure does not allow such a person to be identified), there are no suspicions or if there are doubts that the person identified as the beneficial owner is is actually such a fiction, the legal representatives, managing partners or partners are considered beneficial owners.

In this case, the legal representatives, managing partners or partners of the contractual partner, not also the companies behind them, are to be recorded, both for the fulfillment of customer due diligence obligations and for the file for the automated retrieval of account information. For existing customers, the recording only has to take place as part of the update according to § 10 paragraph 3. Appendices 1 and 2 essentially correspond to the appendices of the 4th Anti-Money Laundering Directive and serve as an aid for those obliged to determine the risk situation.

In the event of a low risk, the identity verification can deviate from the general rules on the basis of other documents, data or information that originate from a credible and independent source and are suitable for the verification.

 

The beneficial owner must always be identified!

Even if the simplified due diligence requirements apply, the beneficial owner or the fictitious beneficial owner must be determined in future.

In paragraph 1 number 1, the requirements of the FATF recommendations as well as Article 13 paragraph 1 of the Fourth Money Laundering Directive, in the case of a person acting on behalf of the contractual partner, to check their authorization to do so, are newly included. The obligation to clarify whether the contractual partner or the beneficial owner is a person within the meaning of Section 1 (12) to (14) is also newly included in number 4. This takes into account the fact that this clarification by the obliged entities regularly together with the fulfillment of the obligations according to paragraph 1 numbers 1 and 2 in relationon all customers(i.e. not only in cases of increased risk), since without prior clarification of the so-called “PeP status” it cannot be finally decided whether general or increased customer due diligence obligations have to be applied to a customer.

There is an increased risk if the contractual partner or beneficial owner is a politically exposed person or is established in a high-risk country, in the case of an unusual or suspicious transaction and if there is a cross-border correspondence with respondents based in a third country.

 

Introduction of the term fictitious beneficial owner - fictitious beneficial owner - reporting obligations

If no beneficial owner can be determined using the criteria outlined above, for example because the shares are in free float, the legal representative or managing partner of the legal entity required to report is regarded as the beneficial owner, so that the reporting obligation then relates to this person.

 

Foundations and trust structures with legal capacity - fictitious beneficial owner - reporting obligations

For foundations with legal capacity and fiduciary legal arrangements, Section 3 (3) of the GwG applies, according to which the group of beneficial owners is very broad: These include all natural persons who act as trustors, trustees or protectors, are members of the board of directors of foundations, beneficiaries are or natural persons who can exercise a controlling influence on asset management or the distribution of income.

 

Scope of reporting obligations - fictitious beneficial owner - reporting obligations to the transparency register

Once the beneficial owner has been identified, the further question arises to what extent there are reporting obligations. From § 19 GwG it follows that in particular the following information about the beneficial owner must be given:

  • First and Last Name
  • Date of birth
  • Place of residence and
  • Type and scope of the economic interest.

While the first three points are self-explanatory, the point "Type and scope of economic interest" requires more detailed explanation. Article 19 (3) of the GwG must be used here.

In the case of legal entities under private law and registered partnerships, with the exception of foundations, the reporting obligation relates to the participation in the association itself, in particular the amount of capital shares or voting rights, the exercise of control in any other way, for example through pooling and voting. or consortium agreements and, alternatively, on legal representatives, managing partners, etc. This means that corresponding pool commitments, etc. must be disclosed. In the case of trusts or other legal structures under Section 21 of the GwG, the notification obligation also relates to the nationality of the beneficial owner.

 

DK information on the Fourth EU Anti-Money Laundering Directive (as of November 20, 2017) on Section 3 in conjunction with Section 10 (1) No. 2 of the GwG - clarification and identification of the beneficial owner

TheScope of dutyto clarify the beneficial owner under the AMLA remains unchanged. If at least one beneficial owner has been identified, there is no longer any room for the fictitious beneficial owner.

If, even after carrying out extensive audits and without facts pursuant to Section 43 (1) of the GwG, no natural person with appropriate control / ownership over / on the contractual partner has been identified, or if there are doubts that the identified person is the beneficial owner , areall legal representativesto identify the managing partner or partner of the contractual partner as a fictitious beneficial owner.

 

Fictitious beneficial owner is a real catch-all - reporting obligations

In the opinion of the Federal Ministry of Finance and BaFin, the regulation of fictitious beneficial owners (Section 3 (2) sentence 5 of the GwG) is a matter of one real catch-all. The obligation to focus on the "fictitious beneficial owner" always exists if a beneficial owner cannot be specifically identified even after a comprehensive review of ownership or control by the obliged entity (e.g. free float) or a case exists , in which, due to the structure of the contractual partner, there cannot be a beneficial owner (e.g. public corporation, public-sector company).

However, there is an obligation to clarify and identify the fictitious beneficial owner (s)Notfor legal entities that are not subject to the applicability of Section 3 Paragraph 2 Sentence 1 (= legal entities and other companies) and Paragraph 3 Sentence 1 of the GwG (= foundations with legal capacity and legal structures with which assets are managed or distributed on a fiduciary basis, or the administration or distribution commissioned by third parties or comparable legal forms) and for which there is therefore no obligation to carry out an inspection with a view to control or ownership (e.g. communities of heirs, WEG or non-legal associations of persons).

The application of the requirements for beneficial owners of foundations with legal capacity apply due to the unlimited use of the word "foundations" in Art. 3 (6) c) of the 4th EU Money Laundering Directive for all types of foundations, i.e. also forSubstance-preserving or charitable foundations. Pursuant to Section 3 (3) of the GwG, only those persons are considered as beneficial owners who meet the requirements specified there.

In the case of foundations with legal capacity, beneficiaries within the meaning of section 3 (3) number 3 of the GwG are only those beneficiaries whose names indicate that they are entitled to benefits from the foundation. If this person has not yet been determined, only that isGroup of natural persons for whose benefit the assets are primarily to be administered or distributedand that arise from the foundation business (Section 3 (3) No. 4 of the GwG). The 4th Money Laundering Directive (EU) No. 2015/849 provides that only the “primarily” beneficiaries are beneficial owners. In this respect, the Money Laundering Act must be interpreted narrowly at this point in accordance with the directive. In the case of a large number of changing beneficiaries who are not specifically identified in the foundation business, not every individual can be recorded and identified as the beneficial owner.

 

Insolvency administrator accounts, trustee and escrow accounts - reporting obligations

Lines 39b and 39g of the DK information on preventing money laundering (as of February 1, 2014)Receivable and bankruptcy trustee accountscontinue to apply.

Insofar as credit institutions in accordance with Section 14 (1) of the GwG can understandably determine that with regard to certainTrust or escrow accountsIf there is only a low risk of money laundering or terrorist financing, it is sufficient within the scope of the simplified duties of care if it is ensured that the credit institution receives the information on the beneficial owner (e.g. in the form of a list) upon request (analogous to line 57 no 5 of the DK information on preventing money laundering (as of February 1, 2014)).

 

Changes to fictitious beneficial owners with implementation of the 5th EU Money Laundering Directive

The regulations of fictitious beneficial owners have now been adjusted in Section 3 (2) of the GwG as follows:

If, even after extensive audits have been carried out and there are no facts according to Section 43 Paragraph 1, the notifiable association according to Section 20 Paragraph 1 cannot identify a beneficial owner in accordance with Paragraph 1 or Paragraph 2, shall apply as the beneficial owner the legal representative, the managing partner or the partner of the contractual partner.

 

In the justification for the law, the following is stated about the fictitious beneficial owner:

The adjustments in paragraph 1 sentence 3 serve to implement Article 1 number 8 letter b of the amending directive. There, sentence 2 stipulates that the measures taken to verify identity as well as difficulties encountered during the verification process must be recorded for members of the management level (i.e. the fictitious beneficial owners according to Section 3 (2) sentence 5).

This goes beyond the previous recording obligation according to paragraph 1 sentence 2 (measures to determine the beneficial owner). Because even if the fictitious beneficial owner has been identified, the task remains to check his identity, i.e. the information collected within the meaning of Section 11 (5).
This, too, must then be documented, including any difficulties encountered during this process.

 

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