Where is information about the beneficial ownership of a company found?

Latest Update: September 2023

Beneficial Ownership

The question of who is behind a company and who is the ‘beneficial owner’ has become increasingly important in recent years for combating terrorist financing and eradicating money laundering together with their predicate offences, such as tax law violations. The European Union is setting the framework with their Money Laundering Directive and, most recently, with the amending Directive to the 4th EU Money Laundering Directive (Directive [EU] 2018/843), which is being implemented by the member states.

The beneficial owners of companies are natural persons who ultimately own a company or control it, and/or natural persons on whose initiative a transaction1 is ultimately carried out or a business relationship is ultimately founded (cf. § 3 (1) GwG (Money Laundering Act)). Improved accessibility to this information is intended to facilitate the fight against money laundering and terrorist financing.

An additional duty of care applies when the beneficial owner is what is termed a politically exposed person (PeP). § 1 (12) of the GwG defines a PeP as any person who holds or has held a high-ranking public office at international, European or national level. It also in- cludes persons who hold or have held a public office position at sub-national level which is comparable in terms of political importance. PePs include but are not limited to ministers, secretaries of state, members of parliament, members of administrative, management or supervisory bodies of state-owned enterprises (where the Federal Government or Federal States own more than 50% and more than 2,000 people are employed) and members of the management bodies of audit offices.

To make it easier to identify PePs, each EU member state and the European Commission update a list in accordance with Article 1 No. 13 of the amending Directive to the 4th EU Money Laundering Directive (Directive [EU] 2018/843) in which the precise functions are stated that are to be considered as important public offices as defined by the Directive. In Germany, the Federal Ministry of Finance is responsible for drawing up and updating the list and sending it to the European Commission. The European Commission combines the EU member states’ lists and their own list and publishes a joint list.

German Transparency Register

In Germany, beneficial owners can be found in the transparency register, which is accessible via an Internet portal. A transparency register was established on 26 June 2017 as part of the implementation of the 4th Money Laundering Directive (EU) 2015/849 of 20 May 2015. The register is a catch-all register that holds data on beneficial owners unless this data is already available in other publicly accessible registers. This means that information on beneficial owners from already-existing, publicly-accessible electronic registers (see above) could be retrieved from the transparency register. Besides, the register also provides information in those cases where the beneficial owners cannot be determined from other registers so that they have to be notified immediately to the transparency register.

The Law on Networking transparency registers in Europe promulgated on 30 June 2021 and the implementation of Directive (EU) 2019/1153 of the European Parliament and the Council dated 20 June 2019 on the use of financial information for combating money laundering, financing terrorism and other serious crimes (transparency register and Financial Information Act) transformed the transparency register from a catch-all register into a full register. This means that after the law came into force on 1 August 2021 all legal entities were required to immediately notify their beneficial owners to the registry office of the transparency register for entry. This obligation is subject to a transitional period, which expired by 31 December 2022 at the latest, depending on the form of legal entity. From 1 January 2023 an entry on beneficial owners should be available in digital form in the transparency register for all German companies and other legal entities. The accuracy of the data and compliance with the registration obligations is checked by the Federal Office of Administration (the competent fining authority) and also by the discrepancy reports from persons subject to anti-money laundering obligations and authorities. Accordingly, the parties subject to § 23a of the German Money Laundering Act (GwG) and the authorities are to report without delay any discrepancies they may discover between the information on the beneficial owners reflected in the transparency register and the information and knowledge they have on the beneficial owners.

Information on beneficial owners in the Transparency Register

The first name and surname of the beneficial owner, his or her date of birth, place of residence, country of residence, extent of the economic interest and all nationalities are recorded.

Management of the Transparency Register

The transparency register is operated by the Bundesanzeiger Verlag GmbH as an appointed authority. In principle, the associations and legal entities in Germany mentioned in § 20 and § 21 GwG are required to report the current information on the beneficial owner in electronic form to the transparency register. The registry office carries out a sense check of the data notified when making the entry, § 18 (3) GwG. The content of the data notified is checked if a discrepancy report has been submitted.

Incorrect, incomplete or missing entries are punishable by fines as set out in § 56(1) sentence 1 number 55 GwG. The Federal Office of Administration (BVA) is the regulatory authority responsible for imposing fines. Furthermore, any party subject to money laundering laws (e. g. banks, financial service providers, insurance institutes, real estate agents, lawyers and notaries to the extent that they buy or sell property for their clients) and any authority must report any anomalies they notice in the transparency register as set out in § 23a GwG. The failure of any party subject to money laundering laws to report an anomaly as required is also punishable by a fine (§ 56(1) para. 1 No. 66 GwG). Since the introduction of the obligation to report discrepancies under § 23a GWG (1 January 2020), the parties under the reporting obligation have made a total of 8,858 discrepancy reports in 2020 (2021: 18,052;2022: 34,287; 2023: 64.027). Authorities authorised to inspect the transparency register to fulfil their duties have submitted no discrepancy reports in 2020, three in 2021, three in 2022 and five in 2023.

Where the fine exceeds an amount of €200, legally binding and indisputable decisions on fines are published on the BVA website.2

Obtaining information from the Transparency Register

Information about beneficial owners in the transparency register can be accessed by government authorities within the scope of their statutory tasks, persons and bodies that are under the legal obligation to combat money laundering in the performance of their due diligence obligations and, since 1 January 2020, in accordance with the requirements of the amending Directive to the 4th EU Money Laundering Directive (Directive [EU] 2018/843), the general public also have access (§ 23(1) GwG). In this context, a judgment of the European Court of Justice of 22 November 2022 in the joined cases C-37/20 and C-601/20 provides that the rule of the EU Money Laundering Directive, which requires in the whole EU that information on the beneficial owners of companies or other legal persons entered in the transparency register be accessible to all members of the public in all cases, is invalid.
This means that the legal situation of the 4th EU Money Laundering Directive applies again, according to which members of the public must prove a legitimate interest in the inspection. The Independent Administrator shall determine for the companies invited to report whether they have an entry in the Transparency Register and whether this entry is plausible on the basis of the information available to it and to be obtained.
Situation as of April 2023: The Independent Administrator was able to view all entries of the companies participating in the D-EITI in the transparency register and check them for plausibility. He made the following statement on 24 April 2023: After reviewing the information […] and comparing it with public sources available to us, we have not identified any implausibility in the information (as of 21 April 2023). However, we would like to point out that an audit in accordance with section 23a GWG was completed for one participating company in April 2023 and an audit was still pending for another participating company at the time of our enquiry.

Data in the transparency register is not available in the format of open data. If interested parties wish to obtain information from the transparency register, they need to complete a one-time registration form on the website www.transparenzregister.de. The individual registration steps are explained in greater detail in the brief guide “Einsichtnahme in das Transparenzregister für Mitglieder der Öffentlichkeit” (How members of the public can obtain information from the transparency register).

Where the beneficial owner has legitimate interests that require protection, the office that operates the register can still restrict inspection of the transparency register. The beneficial owners must support this with facts to substantiate why obtaining information from the register would put them at risk of becoming victims of certain crimes (e. g. blackmail) (§ 23(2) GwG). As of 9 July 2021, restrictions were set for 2,278. From 2021 onwards, the registry office will produce annual statistics on the number of limitations granted and the reasons for the limitations, publish these on its website under downloads (direct link to the statistics in PDF format) and send it to the European Commission (see § 23(2) last sentence GwG latest version).

To cover the administrative cost, a fee of €1.65 is due for each document that is inspected (see list of fees in the special fees scale for the transparency register of the Federal Ministry of Finance dated 12 November 2021, Transparenzregistergebührenverordnung [TrGebV] (transparency register fees scale)). The fees charged depend on the respective register but they are approximately the same as the fees incurred for inspecting the Transparency Register.

From 1 January 2021 the law enforcement authorities and the central unit for investigating financial trans- actions (Financial Intelligence Unit, FIU) has been given automated access to all data in the transparency register within the context of fulfilling their duties (cf. § 26a GwG). In future, this option will be extended to the supervisory authorities, the Federal Central Tax Office, the local tax authorities and the Office for the Protection of the Constitution at federal and State level as a result of the Transparency Register and Financial Information Act.

EU member states are currently working with the EU Commission to network European transparency regis- ters pursuant to Art. 30 ff. of the amending Directive to the 4th EU Money Laundering Directive (Directive [EU] 2018/843). The result of this networking will be access to the transparency registers of all member states via a shared European platform (“BORIS”).

1 The term “transaction” here means all acts which have the purpose or the effect of a monetary movement or other asset movement.

2 Office of Administration (2022): Decisions on fines (transparency register). URL: https://www.bva.bund.de/DE/Das-BVA/Aufgaben/T/Transparenz- register/Bussgeldentscheidungen/bussgeldentscheidungen_node.html [Accessed on 29 November 2022].

 

Beneficial Ownership

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Glossar

In Federal States in which legislation does not include an excavation law and the State-level Nature Conservation Law does not apply to the extraction of non-energetic, ground-based natural resources in the context of dry excavations, this type of natural resource extraction falls within the scope of the relevant state building regulations.

Legal limitations also exist: State building regulations apply to the excavation of solid rock (limestone, basalt, etc.), for example, in quarries with an area of up to 10 hectares (ha) in which no blasting is carried out. In the event that this area is exceeded, or if water bodies are formed after completion of the extraction operations, the German Federal Immission Control Act (BImSchG) and/or Water Resources Act (WHG) are applicable.
In Bavaria and North Rhine-Westphalia, the above-ground excavation of non-energetic, ground-based natural resources in the context of dry excavations is determined at state level by the existing excavation laws (AbgrG). For the excavation of solid rock (limestone, basalt, etc.) in quarries where blasting does not occur, the AbgrG applies to sites with an area of up to 10 ha. In the event that this area is exceeded, or if water bodies are formed after completion of the extraction operations, the German Federal Immission Control Act (BImSchG) and/or Water Resources Act (WHG) are applicable. In the other Federal States, this type of natural resources extraction is regulated by the respective state building regulations or by the state-level nature conservation laws.

In general, the AbgrG applies to those raw materials the excavation of which is not directly subject to mining law or the mining authorities. These raw materials include (in particular) gravel, sand, clay, loam, limestone, dolomite and other rocks, bog mud and clays. However, the jurisdiction between AbgrG and mining law can vary from case to case in the case of certain raw materials, such as quartz gravels. The requested authority must always verify its own jurisdiction in each case. The AbgrG also encompasses surface area usage and the subsequent rehabilitation of the area.
The German Federal Immission Control Act (BImSchG) is the most important and practice-relevant law in the field of environmental law. It constitutes the basis for the approval of industrial and commercial installations. In the natural resources extraction industry, quarrying companies must have approval to extract stones and earth. Every quarrying area of 10 hectares or more must undergo a full approval procedure, including public participation and UVP (environmental impact assessment). A more simplified approval procedure is used for quarrying areas of less than 10 hectares.

The sphere of responsibility for the legal immission control approval procedure is fully specified in the Immission Control Acts of the Federal States. The Federal States are tasked with the administrative enforcement of the approval procedure. Each individual state’s Environment Ministry – the highest local immission protection authority – usually bears the responsibility for this procedure. Subordinate authorities include regional councils, district authorities and lower-level administrative authorities. Administrative jurisdiction generally lies with the lower-level administrative authorities.
The GDP measures the value of goods and services produced domestically (creation of value) within a given period (quarter, year). The Federal Office of Statistics calculates the GDP as follows: production value minus intermediate consumption = the gross value added; plus taxes on products and minus subsidies = GDP
The gross value added is calculated by deducting intermediate consumption from the production values, so it only includes the value added created during the production process. The gross value added is valued at manufacturing prices, i.e. without the taxes due (product taxes), but including the product subsidies received.

During the transition from gross value added (at manufacturing prices) to GDP, the net taxes (product taxes less product subsidies) are added globally to arrive at an assessment of the GDP at market prices’. Source: Destatis
The planning approval procedure under mining law is used for the approval procedure of a general operating plan for projects which require an environmental impact assessment (§§ 52(2a), in conjunction with 57 a of the BBergG).
There are different definitions and methodological approaches at the international as well as at the national level as to what subsidies are and how they are calculated. According to the definition of the German government’s subsidy report, this report considers federal subsidies for private companies and economic sectors (ie grants as cash payments and tax breaks as special tax exemptions) which are relevant to the budget. Subsidies at the federal level can be viewed via the subsidy reports of the federal states (see Appendix 5 of the German government subsidy report).
In compliance with § 68(1), Water Resources Act (WHG), the excavation of landowners’ natural resources such as gravel, sand, marl, clay, loam, peat and stone in wet extraction operations requires a planning approval procedure. The reason for this is that groundwater is exposed in wet extraction, resulting in above-ground water. The planning approval procedure is implemented by lower-level water authorities.

The procedural steps of the planning approval procedure are governed by the general provisions of §§ 72 to 78 of the Administrative Procedures Act (VerwVfG). Within the meaning of § 68(3), nos. 1 and 2 of the WHG, the plan may only be established or approved if an impairment of the common good is not to be expected and other requirements of the WHG as well as other public-law provisions are fulfilled.