Where can information about the beneficial ownership of a company be found?
Beneficial Ownership
The question of who is behind a company and who is the ‘beneficial owner’ has become increasingly impor- tant 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 Laun- dering 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 transaction18 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 func- tions 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, the beneficial owner can be found in the information contained in publicly-accessible registers, such as the trade, cooperative, partnership, association or enterprise registers. A transparency register was established on 26 June 2017 within the framework of the implementation of the Fourth Money Laundering Directive (EU) 2015/849 of 20 May 2015. The register contains beneficial owner data in the form of an Internet portal. In concrete terms, this means that the transparency register contains information on benefi- cial owners from already-existing, publicly-accessible electronic registers (see above). It also means that information can be accessed in the cases in which the beneficial owners cannot be determined from other registers and therefore the beneficial owners had to be notified immediately to the transparency register. The transparency register thus expands and completes the information on beneficial owners. This also applies to trusts and similar legal forms which have hitherto remained unidentified.
The Law on Networking transparency registers in Europe promulgated on 30 June 2021 and the imple- mentation 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) transforms the transparency register into the full register. This means that after the law comes into force on 1 August 2021 all legal entities are required to notify their beneficial owners to the registry office of the transparency register of for entry. From this time a positive entry on beneficial owners will be available in digital form in the transparency register for all German companies and other legal entities.
Notifications must be filed by December 2022 at the latest, depending on the company form.
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 Bundes- anzeiger 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 not checked.
Incorrect, incomplete or missing entries are punishable by fines as set out in § 56 (1) para. 1 number 55 GwG. The Federal Office of Administration (BVA) is the regulatory authority responsible for imposing fines. Furthermore, any body 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 authorities must report any anomalies they notice in the transparency register as set out in
§ 23a GwG. The failure to report an anomaly as required is also punishable by a fine (§ 56 (1) para. 1 No. 66 GwG).
Since the duty to report anomalies was introduced
(1 January 2020) and July 2020 (pro rata), entities sub- ject to these legal requirements have reported a total of 18,408 anomalies. Authorities who are allowed to inspect the transparency register as part of fulfilling their duties have not reported any anomalies during the corresponding period.
Where the fine exceeds an amount of EUR200, legally binding and indisputable decisions on fines are published on the BVA website.19
Obtaining information from the Transparency Register
Information about beneficial owners in the transpar- ency register can be accessed by government authori- ties within the scope of their statutory tasks, persons and bodies legally obligated to combat money laun- dering 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).
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 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 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 Commis- sion (see § 23 (2) last sentence GwG latestversion).
To cover the administrative cost, a fee of EUR1.65 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
8 January 2020, Transparenzregistergebührenverord- nung [TrGebV] (transparency register fees scale)). If the transparency register provides a cross-reference to one of the other electronic registers (such as the commercial register or the company register), because the beneficial owner is possibly from these registers, only the fees for inspecting the other relevant register are incurred.
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”).
1The term “transaction” here means all acts which have the purpose or the effect of a monetary movement or other asset movement.
2See the request made to the Federal Government by the parliamentary group DIE LINKE.
4Request made to the Federal Government by the parliamentary group DIE LINKE.
