Since our e-alert of 15 February 20181, the last three pieces of legislation aimed at formally transposing the fourth anti-money laundering directive2 (AMLD IV) in Luxembourg have been amended in the course of the legislative process, namely:
- bill n° 7208 implementing the directive 2016/2258 pursuant to which national tax authorities shall be granted access to the mechanisms, procedures, documents and information referred to in articles 13 and 40 of the AMLD IV;
- bill n° 7216 implementing article 31 of the AMLD IV pertaining to the register of trusts; and
- bill n° 7217 implementing article 30 of the AMLD IV pertaining to the register of ultimate beneficial owners.
At this stage it is still uncertain if all amendments will be approved in their current form. We understand however that there is a clear intention on the legislator’s side to adopt bills n° 7216 and n° 7217 as soon as possible.
Register of beneficial owners
As regards more specifically bill n° 7217, two key changes have been introduced in the text to already implement the amendments made to article 30 of the AMLD IV pursuant to the entry into force of the so-called fifth anti-money laundering directive3.
1. EXTENDED ACCESS RIGHTS TO THE REGISTER OF BENEFICIAL OWNERS
Bill n° 7217 now provides that any person, whether or not residing in Luxembourg, may request access to the following information held in the Register of Beneficial Owners (REBECO) : the first names, last name, nationalities, full date and place of birth, country of residence and the nature and extent of the beneficial interests held by the beneficial owners of an entity registered with the Luxembourg Trade and Companies Register (a Concerned Entity). To get access to that information, neither a legitimate interest nor a prior authorisation by a competent organ will be required.
However, a Concerned Entity will now have the possibility to request an exceptional exemption - whereby the access will be restricted to the national authorities only - in three additional scenarios: where granting access would expose the beneficial owner to (i) a disproportionate risk, or (ii) a risk of extortion or (iii) a risk of harassment4.
2. NEW OBLIGATION FOR THE BENEFICIAL OWNER
Under the new text of bill n° 7217, the beneficial owners of a Concerned Entity themselves must now provide all necessary information about them (as listed in article 3 of the bill) to that Concerned Entity.
Failure by a beneficial owner to provide the necessary information may trigger a criminal fine ranging from EUR1,250 to EUR1,250,000.
Register of fiducies
Bill n° 7216 has been split into two new bills, bill n° 7216A and bill n° 7216B, which deal with (a) the information to be collected and held by the fiduciary agent on the beneficial owners of the fiducie that it acts for and (b) the register of fiducies, respectively.
It is worth noting that no transitional period is provided in bill n° 7216A and that the definition of beneficial owner has been amended to refer to "a class of beneficiaries".
1. IMMEDIATE APPLICATION OF THE NEW OBLIGATIONS IMPOSED ON FIDUCIARY AGENTS
To the extent that bill n° 7216A does not provide for a transitional period, the fiduciary agents will have to comply with the provisions of the new law within four days after its publication. Unless a transitional period is reinstated in the bill, fiduciary agents are advised to anticipate the entry into force of the law and start collecting all relevant information immediately.
2. BENEFICIARIES CAN BE IDENTIFIED AS A CATEGORY OF BENEFICIARIES
The information on the beneficial owners to be collected and kept by the fiduciary agent still comprises the identity of the principal, the fiduciary agents, the beneficiaries and any individual who has control over the fiducie. As an alternative to the identification of each beneficiary on an individual basis, it is now possible to identify a class of beneficiaries. The identification by reference to a class of beneficiaries seems to be possible every time that the beneficiaries of the fiducie can be designated by common characteristics or by a class. More guidance as to when such identification is possible in practice would be helpful.
2 Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.
3 Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU. This directive entered into force on 9 July 2018.
4 Under the previous version of bill n° 7217, an entity could request such an exemption, in exceptional circumstances, only in the following scenarios: where granting 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 incapable.