Index:

1. Introduction
2. Defining the beneficial Owner
3. Accessibility of UBO information
4. Information requirements
5. Important amendments to the provisions of AMLD 4 on the beneficial ownership registers
6. Implementation

1. Introduction:

The idea of UBO registers was initially introduced in May 2015 by the 4^th EU Anti-Money Laundering Directive (EU) 2015/849 (AMLD 4). The Directive provided for the establishment of state registers which would list the beneficial owners of companies, trusts, foundations, and other legal arrangements in an effort to enhance corporate transparency and to facilitate the fight against financial crime.

In an effort to respond to the ever growing need for tackling financial crime, terrorism funding and obfuscation of funds over the last years, the European Parliament and the Council of Europe published in May 2018 the 5^th EU Anti-Money Laundering Directive (EU) 2018/843 (AMLD 5) establishing an even more demanding system of UBO central state registers.

2. Defining the beneficial Owner

Pursuant to Article 3 of the AMLD 4 a beneficial owner is a natural person who ultimately owns or controls the customer and/or the natural person(s) on whose behalf a transaction or activity is being conducted.

AMLD 4 clarifies that in the case of corporate entities a UBO is the natural person who ultimately owns or controls a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that entity, including through bearer shareholdings, or through control via other means.

A shareholder holding 25 % plus one share or an ownership interest of more than 25 % in the customer shall be regarded to indicate direct ownership whereas a corporate entity, which is under the control of a natural person(s), or by multiple corporate entities, which are under the control of the same natural person(s), holding the 25 % plus one share of the customer or an ownership interest of more than 25 % in the customer shall be regarded as indicating an indirect ownership.

When it comes to trusts and other legal entities such as foundations, and legal arrangements similar to trusts, the AMLD 4 requires the registration of information with respect to the following persons:

• Settlor
• Trustees
• Protector (if any)
• Beneficiaries
• any other natural person exercising ultimate control over the trust by means of direct or indirect ownership or by other means

3. Accessibility of UBO information

AMLD 5 has amended provisions of its predecessor with respect to the accessibility of the information on UBOs providing that the records shall be available to:

• competent authorities and FIUs without any restrictions
• obliged entities within the framework of customer due diligence in accordance with Chapter II
• any member of the general public

4. Information requirements

Further it is provided that members of the general public shall be permitted to access at least the following:

• name
• nationality
• month and year of birth
• country of residence
• nature and extend of beneficial interest

Member states may also choose to provide access to additional information allowing the identification of the individual subject to conditions. Provided that any additional information to be provided shall be in accordance with data protection rules, such information may include date of birth or contact details.

5. Important amendments to the AMLD 4 provisions on beneficial ownership registers

One of the most notable amendments introduced by the AMLD 5 with respect to beneficial ownership registers is the abolishment of the requirement to show a legitimate interest in order to acquire access to the information registered.

Further, all trusts and other similar legal arrangements will now be required to collect and hold information on UBOs whereas AMLD 4 provided for such obligations only for trusts generating tax consequences.

Under all circumstances, data available to the public must be limited to specific defined information. The AMLD 5 also provides for an exception which may be adopted by the member states in case the exposure of the data to the public would result to disproportionate risks in relation to fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation or when the beneficial owner is a minor or otherwise legally incapable.

In addition, member states may require an online registration as a condition to access the data along with a fee which shall not exceed the administrative costs of the Register.

Lastly, member states should ensure that the national UBO- registers are interconnected in order to facilitate international cooperation.

6. Implementation

The provisions of the AMLD 4 have been transposed into Cyprus national laws as from the 3^rd of April 2018 following the amendments to the national legislation already in place on prevention and suppression of anti-money laundering activities and terrorism financing.

The Law 13/(I)/2018 (the Law on the Prevention and Suppression of Money Laundering and Terrorist Financing (Amending) Law of 2018) includes provisions for the central register of UBO information set out in sections 61A and 61B. The date of the publication of the Cyprus respective central register required by AMLD 5 has not yet been announced. AMLD 5 indicates that EU member states should have transposed the provisions of the Directive into their national laws by January 2020.

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