The UBO Register
Pursuant to the Act registration ultimate beneficial owner, certain Dutch legal entities must register their ultimate beneficial owner (UBO) when filing with the Dutch Chamber of Commerce as per 27 September 2020. Already existing legal entities falling under the scope of this Act can make use of a transition period of 18 months. Due to this registration, the following UBO information will become publicly accessible: name, month and year of birth, country of residence, nationality and the nature and extent of the UBO’s interest.
The obligation to register UBO’s applies to: BV’s, NV’s, verenigingen, onderlinge waarborgmaatschappijen, cooperations, maatschappen, VOF’s, CV’s, rederijen, SE’s, SCE’s, EESV’s and kerkgenootschappen. The obligation to register UBO’s does not apply to: eenmanszaken, listed companies and their 100% direct or indirect subsidiaries, VvE’s, verenigingen with limited legal capacity and with no commercial activity and public law entities. According to art. 30(9) of Directive (EU) 2015/849 (AML4), a request for an exemption can be made in exceptional circumstances. Such circumstances could be the exposure of the UBO to the risk of fraud, kidnapping, blackmail, violence or intimidation, or where the UBO is a minor or otherwise incapable.
Background of the UBO registration: AML4
AML4 is the key EU Directive that contains rules to prevent the use of the financial system for the purposes of money laundering and terrorist financing. It holds detailed customer due diligence requirements for obliged entities, such as: banks, investment companies and financial services providers. Obliged entities must (1) identify their client and verify its identity, (2) identify the UBO and take reasonable measures to verify its identity and (3) when the client is a legal entity, take reasonable measures to gain insights in the ownership- and control structure of the client. The aim is to actually understand the ownership and control structure. This can be quite challenging when examining complex corporate structures. AML4 also holds the requirement for corporate and other legal entities to obtain and hold adequate, accurate and current information on their beneficial ownership. AML4 and its successor Directive (EU) 2018/843 (AML5) are, for the most part, implemented in the Act for the prevention of money laundering and financing of terrorism (Wwft). The Decree Wwft holds further detailed rules.
Who qualifies as UBO?
The UBO definition from art. 3(6) AML4 is implemented in art. 1 Wwft as: the natural person who ultimately owns or controls a client, or the natural person for who’s account a transaction or activity is performed. This is a broad definition. The Dutch Minister of Finance stated in a letter to the Dutch Parliament that: “It shall differ from case to case which individual qualifies as UBO. Simply put, the UBO is the natural person who, whether or not behind the scenes, pulls the strings within a company or legal entity.” Pursuant to art. 3(1) Decree Wwft, these natural persons are in any event the natural persons who ultimately own or control a non-listed BV or NV through (1) the holding of (direct or indirect) 25% or more of the shares, voting rights or ownership in the entity or (2) other means, including the requirements for consolidation of an annual account.
When, in short, no person fits the UBO-definition and only when there are no grounds for an AML-suspicion, a pseudo-UBO should be appointed. The pseudo-UBO should be the natural person or persons belonging to the higher management of the entity. In that case, according to the Dutch legislator, all statutory directors should be appointed as pseudo-UBO, irrespective of their authority to represent the entity. According to the (somewhat dated) AFM’s Guideline Wwft appointing a pseudo-UBO should be regarded as ultimate fallback.
The concept of joint control
Some countries seem to acknowledge the concept of joint control, due to a broad interpretation of the phrase “or through control via other means” (art. 3(6)(a)(i) AML4) or local AML law. As a result, local law could qualify two individuals as UBO’s when – in case of corporate entities – they ultimately control a legal entity by means of their joint control. If local law in a specific country acknowledges the concept of joint control, two individuals not qualifying as UBO’s in one country could qualify as such in another country. Dutch law does not seem to acknowledge this concept.