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 important in recent years for combating terrorist financing and eradicating money laundering together with their predicate offenses, such as tax law violations. The relevant framework is set by the European Union with its Money Laundering Directive, and, most re- cently, the amending Directive to the 4th EU Money Laundering Directive (RL [EU] 2018/843) which is 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(11) GwG [Money Laundering Act]). Improved accessibility to this information is intended to facilitate the fight against money laundering and terrorist financing.

Enhanced due diligence obligations apply if the beneficial owner is a so-called politically exposed person (PEP). A PeP is defined in § 1(12) GwG as any person who holds or has held a high-ranking important public office at international, European or national level. Also included are persons who hold or have held a public office below the national level but of comparable political importance. PePs include, in particular, ministers, state secretaries, members of parliament, members of the administrative, management and supervisory bodies of state-owned enterprises, and members of management bodies of audit institutions.

Enhanced due diligence obligations apply if the beneficial owner is a so-called politically exposed person (PEP). A PeP is defined in § 1(12) GwG as any person who holds or has held a high-ranking important public office at international, European or national level. Also included are persons who hold or have held a public office below the national level but of comparable political importance. PePs include, in particular, ministers, state secretaries, members of parliament, members of the administrative, management and supervisory bodies of state-owned enterprises, and members of management bodies of audit institutions.

In accordance with Article 1 no. 13 of the Amending Directive to the 4th EU Money Laundering Directive (Directive [EU] 2018/843) each EU Member State and the European Commission shall draw up and update a list indicating the functions that are to be considered as important public offices within the meaning of the Directive to facilitate the identification of PePs. In Germany, the Federal Ministry of Finance is responsible for the creation, update and transmission of the list to the European Commission. The European Com mission will merge the lists of EU Member States with its own list. The resulting joint list will be published soon.

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. As part of the implemen- tation of the Fourth Money Laundering Directive (EU) 2015/849 of May 20, 2015, a Transparency Register was established on June 26, 2017. The Register contains beneficial owner data in the form of an Internet portal. Thus, on the one hand, the portal contains information on beneficial owners taken from already- existing, publicly-accessible electronic registers (see above). On the other hand, information can also be retrieved in cases where the beneficial owner cannot be derived from other registers so that the identity of the beneficial owners had to be communicated directly 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.

Where the obligation to notify the Transparency Register exists because the beneficial owner does not already exist in other registers, such notification had to be carried out by October 1, 2017. Information about beneficial owners – and this also concerns companies in the extractive industry – are available for viewing in the register from December 27, 2017 (for details, see “Obtaining information from the Transparency Register” below).

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, and the type and extent of the economic interest are recorded.

Management of the Transparency Register

The Transparency Register is managed by the Bundesanzeiger Verlag GmbH (Federal Gazette publishing company). In principle, the associations and legal entities in Germany mentioned in § 20 and § 21 GwG are obliged to report the current information on the ben- eficial owner in electronic form to the Transparency Register, unless the respective beneficial owner has already been recorded in another register (so-called notification fiction, cf. details in § 20(2) GwG). If a registration is made, the entity keeping the register checks the reported data for conclusiveness (§ 18(3) GWG. However, the content of the reported data is not checked.

The question of whether all necessary entries have been made in the transparency register (which is designed as a catch-all register) cannot be answered in general terms. By July 20, 2020, 119,110 entries had been made. Whether associations and legal entities that are already entered in another register have provided sufficient information on the beneficial owners in those other registers is not automatically checked. However, for the associations subject to the reporting requirement an individual examination is carried out.

Incorrect, incomplete or missing entries are also subject to fines under § 56(1) sentence 1 no. 55 GwG. The competent regulatory authority for imposing fines is the Federal Administrative Office (BVA). In addition, the persons and entities having obligations under money laundering law (e. g. credit institutions, financial services institutions, insurance institutions, real estate agents or lawyers and notaries if they buy or sell real estate or commercial enterprises for their clients) and public authorities must report any discrepancies in the Transparency Register there become aware of pursuant to § 23a GwG. Failure to report a required discrepancy is also subject to a fine (§ 56(1) sentence 1 no. 66 GwG). In the period between the introduction of the obligation to report discrepancies (January 1, 2020) and July 2020 (pro rata-based), obligated parties made a total of 3,104 discrepancy reports.2 Authorities that are authorised to inspect the Transparency Register for the performance of their duties did not submit any discrepancy reports in the corresponding period.

Final and incontestable decisions on fines are pub- lished by the BVA on the internet if the fine exceeds an amount of €200.3 Most fines are imposed to prosecute administrative offences of non-communication.4

Obtaining information from the Transparency Register

The information on the beneficial owners in the Transparency Register is available to government authorities for fulfilling their statutory duties, to those obliged under money laundering law for fulfilling their due diligence obligations under money laundering law and, since January 1, 2020, to the entire public in accordance with the requirements of the amending Directive to the 4th EU Money Laundering Directive (Directive [EU] 2018/843) (§ 23(1) GwG).

The data of the Transparency Register is not available in open data format. If interested parties wish to inspect the Transparency Register, they must register on the website www.transparenzregister.de (one-time registration). The individual registration steps are ex- plained in more detail in the quick guide “Inspection of the Transparency Register for members of the public”.

If any of the beneficial owner’s interests are worthy of protection, it is still possible to have the inspection of the Transparency Register restricted by the entity keeping the register (registry). For such a restriction, the beneficial owners must provide evidence of the fact that an inspection would expose them to the risk of becoming victims of certain criminal offences (e. g. extortion) (§ 23(2) GwG). By July 20, 2020, 1,598 applications for restriction had been submitted. From 2021 onwards, the registry will compile annual statistics on the number of approved restrictions and the reasons for restrictions, publish them on its website and forward them to the European Commission (cf. § 23(2) last sentence GwG, new version).

To cover administrative expenses, a fee of €1.65 is due for each document inspected (cf. Schedule of Fees of the Special Schedule of Fees of the Federal Ministry of Finance for the Transparency Register of January 8, 2020, Transparency Register Fees Ordinance [TrGebV]). If the Transparency Register refers to one of the other electronic registers (such as the commercial register or the company register) because the information about the beneficial owner is retrieved from one of these registers, only the fees for the inspection of the respective source register are due.

The fees depend on the respective register, but their amount is more or less the same as the fees incurred for the inspection of the Transparency Register.
Law enforcement authorities and the Financial Intelli- gence Unit (FIU) will be given automated access to all data in the Transparency Register as of January 1, 2021 to effectively combating money laundering, corruption and terrorist financing (cf. § 26a GwG, new version).
Currently, the EU Member States are working together with the EU Commission on the interconnection of the European transparency registers pursuant to Art. 30 et seq. of the Amending Directive to the 4th EU Money Laundering Directive (Directive [EU] 2018/843). Once this connection is established, the transparency registers of all Member States can be accessed via a common European platform (“BORIS”). In this context, the rules concerning the so-called notification fiction (see above) according to § 20(2) GwG will be reviewed.

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.

3https://www.bva.bund.de/DE/Das-BVA/Aufgaben/T/Transparenzregister/Bussgeldentscheidungen/bussgeldentscheidungen_node.html

4Request made to the Federal Government by the parliamentary group DIE LINKE.