Registration of beneficial owners
Over the last two years (such as in News 17/2017 and 9/2018) we have informed you regarding the implementation of the register of beneficial owners and the new obligation imposed on all legal entities and trust funds. Under this obligation, legal entities must have their beneficial owner registered in the newly established register. Who is considered to be the beneficial owner is defined in the Act on Certain Measures against the Legalization of Proceeds from Crime and Terrorist Financing (the “AML Act”).
The deadline by which trading companies had to comply with the obligation expired on 1 January 2019.
There have been some indications in recent months how the “obliged entities” – in particular banks – will be dealing with a failure to comply with this obligation. According to the AML Act, those involved have to examine their clients’ entries in the Register of Beneficial Owners. If an entry is incorrect or missing, they are obliged to draw to their clients’ attention the legal consequences of such a lapse and, in extremis, to terminate their professional relationship.
Some banks strictly comply with their obligations and, in some cases, have been prompt to terminate clients’ banking arrangements.
This issue is not only relevant to banks, but also to other obliged entities, including financial institutions such as insurance and leasing companies, and also some consultants. However, a bank is usually the first institution to deal with this issue when treating a typical client. Considering the necessity of having a bank account, plus the other services provided by a bank, the unilateral termination of a relationship by a bank usually has considerable implications for the client. The costs incurred as a result of such a situation may be significant.
It is therefore highly recommended that each legal entity that has not yet done so has the data of its beneficial owner registered and actively reviews and updates the entry whenever changes occur.
We are ready to advise you on good practice and any further steps necessary for registration.