Germany: First experiences with the new transparency register introduced in October 2017
In July 2017, the Money Laundering Act (Geldwäschegesetz, GWG) was completely revised in Germany in the implementation of the Fourth Directive (EU) on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (2015/849). § 18 of the GWG determines the establishment of the so-called transparency register, which is managed by the Bundesanzeiger Verlag GmbH. The register is the official platform in Germany for data of beneficial owners. Notifications for registration have been incumbent on the reporting agent since 01/10/2017, which is often unrecognised in practice. The primary purpose of the transparency register is to identify the beneficial owner.
Who is affected by the obligations of the transparency register?According to § 20 Para. 1 sentence 1 of the GWG, legal entities under private law and registered partnerships are obliged to obtain, store and keep up-to-date the required information of the beneficial owners in accordance with § 19 of the GWG and to inform the transparency register immediately in respect of registration. The following are thus obligated to make reports to the transparency register in particular:
- Private Limited Liability Companies and UG (limited liability),
- Stock companies,
- Partnerships limited by shares,
- Societas Europaea (SE),
- General partnerships,
- Incorporated partnerships,
- Partnership companies,
- Foundations with legal capacity,
- Foundations with no legal capacity, if
- the purpose of the foundation is self-serving from the point of view of the founder,
- Business associations
- Non-profit associations as far as registered.
The reporting obligation always applies to the legal person as such. In order for this information to be obtained from the beneficial owner, § 20 Para. 3 of the GWG stipulates the obligation of shareholders who are beneficial owners or are directly controlled by an economic owner, to provide the necessary information without delay. The first and last name, date of birth, place of residence and the nature and scope of the economic interest are to be stated.
- 3 of the GWG defines who is the beneficial owner. In principle, the beneficial owner of an enterprise is any natural person, who directly or indirectly
- holds more than 25% of the capital shares,
- controls more than 25% of the voting rights or
- exercises control in a comparable manner.
When is the obligation to notify considered fulfilled?
The obligation to report to the transparency register is already considered fulfilled if the required duties to the beneficial owner result from documents and entries which can be retrieved electronically or online from the commercial register, partnership register, cooperative register, register of associations or register of companies.
Omitted, incomplete or false reports can lead to prosecution as an administrative offence with fines in the millions.
Autor: Axel Berninger