Internet consultation on implementation UBO register
The Netherlands must establish a central register containing information about ultimate beneficial owners. The related draft bill was presented for internet consultation recently.
6 april 2017
Under the fourth European anti-money laundering directive, the Netherlands must establish a register with data on UBOs (Ultimate Beneficial Owners). The directive represents a new attempt by the European legislature to combat money laundering and terrorist financing. The directive stipulates that the identity of a natural person who is entitled to a legal entity or who exercises control over it, must be identified. All EU Member States must establish a register containing information on these UBOs. The draft legislation for the Dutch version of the UBO register has been presented for consultation recently. This consultation offers the possibility to respond to the draft.
Objectives UBO register
According to the explanatory memorandum to the draft bill, the objective of the Dutch UBO register is to make a valuable contribution to achieving more transparency on UBOs of companies and legal entities. Like the directive, the legislature tries to prevent the use of the financial system for the purposes of money laundering or terrorist financing. Examination of the UBO information (or, rather, the lack of it) should allow persons or organizations to obtain better information in choosing whether or not to do business with the related legal entity or company. The bill is expected to create a tougher barrier against corruption, tax crimes and fraud. Keeping updated UBO information likewise serves to promote legal certainty in commerce and the economic interests of trade, industry, skilled trades, and services.
The UBO register will be part of the Trade Register. Registration of UBOs of companies and other legal entities incorporated in the Netherlands will be compulsory. A UBO is defined as the natural person who is the ultimate owner of, or who exercises control over, a company or legal entity. The bill does not provide a precise description of who, exactly, falls within the scope of this definition. This will be detailed later, in two Decrees. UBOs are held to ensure, at all times, the correct and complete registration of this information in the Trade Register. What’s more, the intention is to implement a reporting obligation. Certain agencies will thus have the obligation to report to the Chamber of Commerce any doubts they have about whether specific UBO information is correct or complete.
Four privacy safeguards will be embedded into the UBO register. First of all, the recipients of the register will be registered. UBOs can file a request to be allowed to examine the categories of recipients who have consulted their personal data. The second safeguard is a cost-effective fee to be paid for examining the register. Next, only a limited UBO data set will be publicly available: a UBO’s name, month of birth, year of birth, nationality, country of residence, and the size of the economic interest held by the UBO. Finally, an exception is made for situations where there is a risk of fraud, kidnapping, blackmail, violence or intimidation, or where the beneficial owner is a minor or otherwise incapable. If so, UBOs can file a request with the Chamber of Commerce to protect their personal data. Such situations will be assessed on a case-by-case basis to see whether part of the UBO information should be protected.
The consultation is open through April 28, 2017. The Netherlands must implement the UBO register in its national legislation before June 26, 2017. Although implementation of the UBO register is not the subject of political controversy, we expect time to be too short to meet this deadline. The Minister of Finance has already characterized the implementation period as “decidedly ambitious”.