The Act of 18 September 2017 on the prevention of money laundering and terrorist financing and on restriction of the use of cash added new articles 14/1 and 14/2 to the Belgian Companies Code. Pursuant to these new provisions, companies are required to obtain and hold adequate, accurate and current information on their "beneficial owners", as well as details of the beneficial interests held by these beneficial owners. There are financial penalties for failing to do so.
New anti-money laundering act and UBO register
The Act of 18 September 2017 on the prevention of money laundering and terrorist financing and on restriction of the use of cash (Official Gazette, 6 October 2017) implements the fourth anti-money laundering directive (Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing). Pursuant to this directive, the Member States must, among other things, establish a central register containing data on the beneficial owners, the so-called "UBO register" (articles 73–75 of the Act of 18 September 2017; see also Eubelius Spotlights June 2017). The royal decree establishing the UBO register is currently being drafted and will probably not be published before the end of spring 2018.
To supply the UBO register and keep it up to date, the new article 14/1 of the Companies Code requires companies to obtain and hold adequate, accurate and current information on their beneficial owners, as well as on the beneficial interests that they hold. The management of the company is required, on the basis of its residual competence, to collect at least the following information: the name, date of birth, nationality and address of the beneficial owner, as well as the nature and extent of the beneficial interest held by the beneficial owner (article 14/1, paragraph 2 Companies Code).
In addition, the member(s) of the managing body are required to send, by electronic means, information relating to the beneficial owners to the UBO register within one month after this information is known or modified (article 14/1, paragraph 3 Companies Code). This obligation will only be effective when the royal decree establishing the UBO register has entered into effect. The information will have to be disclosed to entities subject to the obligations of the Act of 18 September 2017 "when the latter take due diligence measures towards customers" (article 14/1, paragraph 4 Companies Code).
Scope of application
The new article 14/1 of the Companies Code was added to Book I – Introductory Provisions of the Companies Code and is therefore applicable to all companies under Belgian law, regardless of their form.
Concept of "beneficial owner"
The Act of 18 September 2017 generally defines the beneficial owner as "any natural person(s) who ultimately own or control the customer or the customer's representative and/or the natural person(s) on whose behalf a transaction is being conducted or a business relationship is established" (article 4, paragraph 1, 27° of the Act of 18 September 2017).
For companies, this definition covers in particular (article 4, paragraph 1, 27°, a) of the Act of 18 September 2017):
- the natural person(s) who own or control, directly or indirectly, a sufficient percentage of the shares or voting rights or ownership interest in the company. Any natural person directly or indirectly owning, alone or together with others, more than 25% of the shares or voting rights or ownership interest in the company is deemed to be a beneficial owner;
- the natural person(s) who control the company by other means; and
- if no person who ultimately owns or controls the company under points (i) and (ii) is identified, the natural person(s) who hold the position of senior managing official(s).
Under the third anti-money laundering directive, companies were already required to be able to provide information on their beneficial owners when they wished to become a client of an entity subject to the obligations of the Act, failing which the entity concerned was required to refuse to allow a business relationship to be established.
In practice, the identification by the company of its beneficial owners is difficult for the management body of a non-listed company, as the management body only directly knows the shareholders named in the company's registers of registered securities. We note that article 515bis of the Companies Code, as amended by the Act of 18 September 2017, imposes a reporting obligation on shareholders who directly or indirectly hold 25% or more of the voting rights of a non-listed public limited liability company that has issued bearer or dematerialised securities.
Companies are now required to actively collect – and keep up to date – data on their beneficial owners with a view to sending this information to the UBO register.
On 20 December 2017, the Council and the European Parliament reached a political agreement on a proposal for a fifth anti-money laundering directive, initiated shortly after the terrorist attacks in Paris and impacted by the Panama Papers. In the text of the Commission's initial proposal, it had been proposed to lower the threshold of 25% (cf. above) to 10% in respect of certain types of entities which present a specific risk of being used for money laundering and tax evasion. However, in the political agreement of 20 December 2017, the Council and the European Parliament called upon the Commission to assess, in a supplementary report, the need for lowering this threshold in the light of any recommendations issued in this regard by international organisations with competence in the field of preventing money laundering and terrorist financing.
Failure by the members of the managing body to comply with these new obligations for collection and transmission of data on the beneficial owners of the company will result in exposure to a fine of between EUR 50 and EUR 5,000 (article 14/2 Companies Code). Consequently, it would be advisable for the members of the managing body of any Belgian company to exercise sufficient diligence to collect this information and send it to the UBO register in due time.