New obligations to identify the beneficial owner of a legal entity
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) requires Member States to keep a register containing the information provided by the beneficial owners of companies registered in their territory. Spain has not yet fully implemented the Directive despite the deadline of 26/07/2017.
The Minister of Justice has now tried to at least partially implement the Directive. A new form has been added to the ministerial decree requiring companies to indicate their beneficial owner. All companies required to file their financial statements are affected. The requirements for the information on the beneficial owner differ depending on whether the control is indirect or direct. The form only has to be submitted again in the following years if something has changed in the circumstances.
The EU Regulation requires Member States to ensure that competent authorities and persons or organisations with a legitimate interest can inspect the register. However, the Ministerial Decree only refers to the fact that disclosure is made in accordance with the Directive without ensuring the possibility of inspection itself. Consequently, under Spanish law, the right of inspection should be open to everyone, even without a legitimate interest, and the possibility of restricting the right of inspection provided for in the Directive should not exist either. It therefore remains to be seen whether the commercial registers will also provide the personal data of the beneficial owners upon simple request, forward the form or prepare the data in such a way that, for example, a specific name search would be possible. In addition, the following problems arise:
- The Managing Directors formally have a duty of disclosure. In complex social structures, however, they only have an overview of the companies to which they directly belong.
- It is not yet regulated as to which sanctions are threatened if the duty of disclosure is violated. It is currently to be expected that the Commercial Registers will not permit the filing of annual financial statements without the proper submission of the information form. This is sanctioned with fines of between EUR 1,200.00 and EUR 300,000.00. In addition, any entry in the Commercial Register may be denied until an ordinary declaration has been made (“ban on registering”).
- It is unclear as to which point in time, the duty to provide information refers (end of the business year or filing of the financial statement). Since the Directive stipulates that the information must be up-to-date, the latter must be assumed.
Recommendation for action
Although many questions currently remain unanswered, the identification requirement already applies to the filing of financial statements for the financial years commenced since 01/01/2017. The period is seven months after the end of the financial year. It is therefore strongly recommended that managing directors of Spanish companies obtain the necessary information to fulfil their obligation to identify the beneficial owner.