Approval of 4ML sets clock running on EU beneficial ownership registers

Thursday, 21 May 2015

This week the European Parliament formally voted to adopt the Fourth Money Laundering Directive (4ML)

This is the last stage of the directive's progress through EU institutions, it having been formally endorsed by the European Council in February. The approved text is likely to be gazetted in June or July. That will trigger the two-year countdown to the directive's transposition into the national law of each member state.

A major provision of 4ML is the compulsory introduction of registers of beneficial ownership in all EU countries. The registers will apply to both companies and trusts, although with different rules for each.

Unrestricted access to the company registries will generally be granted to 'competent authorities' such as national tax authorities and law enforcement agencies, and to 'obliged entities' such as banks conducting due diligence checks. However, conditional access will also be allowed to certain people who can demonstrate a 'legitimate interest', such as investigative journalists and other 'concerned citizens'. Member states would only be able to prevent citizens' access to the registers 'on a case-by-case basis in exceptional circumstances'.

Central register information on trusts will be accessible only to competent authorities and obliged entities. These registers will only list trusts that generate tax consequences, and will only contain information that is in any case being made available to tax authorities as part of international initiatives for automatic exchange of tax information.

The revised directive also requires organisations to put in place extra measures when dealing with 'politically exposed persons' or PEPs – typically heads of state, members of government, supreme court judges, and members of parliament and their family members, who may be at a higher risk of corruption. Financial institutions that have high-risk business relationships with such persons, will be required to establish the source of wealth and source of funds involved.


The content displayed here is subject to our disclaimer. Read more