Luxembourg: Luxembourg Introduces A Register Of Beneficial Owners And New AML Obligations For Companies

Last Updated: 9 May 2019
Article by Olivier Sciales

On 13 January 2019 the Luxembourg parliament adopted a new law relating to the register of beneficial owners (hereafter the "Law"). It is a part of the implementation of the recent EU legislation on the anti-money laundering (so-called 4th and 5th anti-money laundering directive). The Law will enter into force on 1 March 2019. The existing companies will have up to six months (i.e. until 1 September 2019) to comply with the new obligations.

The Law applies to all entities, which have been registered with the Luxembourg Register of Commerce and Companies. It considers inter alia all the commercial companies, including most popular like public limited liability company (société anonyme – SA), private limited liability company (société à responsabilité limitée – sàrl), corporate partnership limited by shares (société en commandite par actions – SCA), common limited partnership (société en commandite simple – SCS), special limited partnership (société en commandite speciale – SCSp), cooperative company (société cooperative – SC) etc. Please further note that both regulated and unregulated investment funds (including investment companies with variable or fixed capital – SICAV and SICAF, as well as mutual funds - FCP) are within the scope of the Law.

These entities will be required to identify their beneficial owners and maintain specific, up-to-date information concerning them in the registered office. Furthermore, this information will have to be provided to the central register of beneficial owners, as described below. Listed companies, which have their securities admitted to trading on the regulated market are exempt from the obligation to indicate their beneficial owners in the register, however they still need to make an application in this respect.

The Law establishes a central register of beneficial (Registre de bénéficiaires effectifs, hereafter the "RBE"). The RBE will safe keep and make available relevant information on the beneficial owners to the public or, as the case may be, other specific entities and authorities. The RBE will be kept and operated by the Luxembourg Business Register based on the rules and procedures, which will be soon published by the Luxembourg government.

Who is a beneficial owner?

The Law refers to a definition of the beneficial owner, as further provided by the Luxembourg law of 12 November 2004 on the fight against money laundering and financing of terrorism, as amended from time to time (the "AML Law").The AML Law defines the beneficial owner as any natural person(s) who ultimately owns or controls the legal entity or any natural person(s) on whose behalf a transaction or activity is being conducted.

In case of a corporate entity it shall include any 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. The AML Law indicates in this respect that a participation of 25% in the given entity shall be an indication of direct ownership.

If, after having exhausted all possible means provided by the AML Law and provided there are no grounds for suspicion in this respect, no natural person can be identified as the beneficial owner(s), a senior dirigeant (manager) shall be indicated in the register as the beneficial owner.

What information has to be provided?

The information required includes the following data of the beneficial owner:

  • name,
  • nationality,
  • date and place of birth,
  • country of residence,
  • private or professional address,
  • national identity number, and
  • nature and extent of beneficial interests held in the entity in question.

Inscription in the RBE takes place by means of the electronic platform, which will be made available by the Luxembourg Business Register. The information, including supporting documents, will be kept by the RBE for five years after the dissolution of the entity or it ceasing to exist.

The RBE may refuse the registration request if it is incomplete, does not comply with legal or regulatory provisions, or is inconsistent with the supporting documents.

Any changes of the information registered with the RBE has to be notified within one month from the moment when the register entity got to know or should have got to know about such change.

Criminal penalties, including fines between €1,250 and €1.25 million, may be applied to entities or their representatives if they fail to supply the information to the register within the deadline, provide partial, incorrect or outdated information, or fail to maintain up-to-date records at their registered office. The same criminal fines shall apply to beneficial owners who do not provide the given entity with the necessary information. Anyone with access to the RBE, who becomes aware of incorrect or missing information must inform the register without delay.

Who can access the RBE?

Principal information provided to the RBE (excluding private/professional address and national identity numbers) will be publicly available and can be consulted by any person on-line. Full, unrestricted and unlimited access will be granted to Luxembourg national authorities, including the public prosecutor's office, the financial intelligence unit, the financial market supervisory authority (CSSF), tax authorities etc.

The Law allows exceptionally, on a case-by-case basis and subject to motivated grounds, to request limitation of the access to the information included in the RBE. However, such limitation is only possible in certain exceptional circumstances, such as disproportionate risk of fraud, kidnapping, blackmail, harassment or intimidation towards the beneficial owner or cases where the beneficial owner is underage or otherwise does not enjoy full legal rights. Such limitation does not apply to the access by the Luxembourg public authorities.

Obligation to communicate information on the beneficial owner

The registered entity will be also obliged to communicate all relevant information concerning the beneficial owner, as kept in the registered office of this entity, to the Luxembourg national authorities. Such communication has to be made upon simple request of the public authority and within a deadline of three days from that request.

Furthermore, unless the access to this data had been restricted in accordance with the procedure mentioned above, every registered entity will have to communicate the relevant information on the beneficial owner (except for the personal/professional address and the national identity number) to the professional entities subject to anti-money laundering obligations imposed by the AML Law, such as banks, professional of the financial sector, investment funds, insurance undertakings, notaries, lawyers etc. Such communication has to be made upon a duly motivated request but also within three days following that request.

Failure to provide this information within the given deadlines will also be subject to criminal fines between €1,250 and €1.25 million.

Feel free to contact us should you wish us to assist you with the registration process.

Olivier Sciales
Chevalier & Sciales
36-38, Grand-Rue,
L1660 Luxembourg
Office: + 352 26 25 90 30
Fax: +352 26 25 83 88
Twitter: @oliviersciales

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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