Exception in trust register for small interests has been saved
Exception in trust register for small interests
The recently published Trust Register Implementation Decree shows that beneficiaries of a trust or participants in a fund whose interest is less than 3 per cent do not need to be registered.
7 July 2021
Introduction trust register
The Fourth Anti-Money Laundering Directive obliges the Netherlands to introduce a register in which the ultimate beneficial owners (UBO) of trusts and similar legal arrangements are listed. Until recently, the Netherlands was not obliged to introduce such a register, because the obligation to register only applied to trusts that were established under the law of the EU Member State in question. As the Netherlands does not have the legal form of a trust, there was no obligation to register. With the amendment of the Directive, the obligation to register also applies if trusts are established in the Netherlands or enter into a business relationship or acquire immovable property in the Netherlands. The obligation to register also applies to legal forms that resemble trusts. In the Netherlands, these are mainly the open and closed mutual funds. Other legal forms, such as BVs, already have a obligation to register based on the UBO register. The main features of the trust register have already been laid down in a legislative proposal. A number of details has been worked out in a recently published consultation proposal.
Minimum interest of 3 per cent
All natural persons involved in a trust are considered to be UBOs. This applies, for example, to the settlor of the trust and to the trustee or administrator of the fund. In addition, the beneficiaries of the trust or participants in the fund are registered as UBOs. Large investment funds in particular often have many participants with small interests. The inflow and outflow of such participants is often substantial. Because it is impracticable to continuously update the changes among participants in the trust register, it is proposed that only a 3 per cent interest needs to be registered. The 3-per cent threshold is in line with transparency regulations that already apply to shares in listed companies. The register indicates the size of the UBO’s interest on the basis of ranges. Four categories are used: from 3 to 25 percent, from 26 to 50 percent, from 51 to 75 percent and from 76 to 100 percent. For UBOs that are not beneficiaries of the assets, such as the settlor and the administrator, no range needs to be indicated.
Unlike the UBO register, the trust register must also state the purpose for which a trust or similar legal entity has been established. To make this easier, the Implementation Decree provides a list of purposes from which a choice can be made. Some of the purposes are estate planning of individuals, investment, pension, and scientific or cultural purposes. Furthermore, the Decree stipulates that when a natural person can no longer be designated as UBO, their data will remain accessible for another ten years. Historical UBO data are especially relevant for the prevention of money laundering. The data of persons who request information from the register will also be recorded and kept for a period of five years.
Blocking of data
If a UBO fears that the inclusion of their personal data in the register would threaten their privacy, they can request that their data be blocked. The Implementation Decree regulates when such a request is honoured. A request for blocking will only be granted to persons who are guarded under the Police Act or to persons under the age of 18, who have been placed under guardianship or administration or who have been declared legally incompetent abroad. With these categories, the trust register does not deviate from the previously introduced UBO register for other legal forms.