Expansion of the Transparency Register into an independent register – extended reporting obligations and transitional periods
22 June 2022
In a nutshell: since the implementation of the Fourth EU Money Laundering Directive in June 2017, the Transparency Register has been maintained in Germany as an electronic register. This Register is intended to help combat money laundering and the financing of terrorism.
The register contains entries on the beneficial owners i.e. the natural persons who ultimately own or control an entity. Due to the conversion into an “independent register”, companies that were previously not subject to the reporting requirements must now also check whether they are obliged to report information on the beneficial owners, if necessary also so-called fictitious beneficial owners. Depending on the type of entity, there are transitional periods for subsequent notifications; violations can be punished as administrative offences with fines.
The regulations applicable to the Transparency Register are set out in the sections 18 et seq. AMLA (Act on the Tracing of Profits from Serious Crimes – Anti Money Laundering Act – Geldwäschegesetz). Initially the Transparency Register operated as a “dependent register”, i.e. for information available in other public registers (such as the commercial register) no independent reporting obligations to the Transparency Register existed. The register then converted to an “independent register” in August 2021 as a result of which all legal entities became subject to transparency requirements (including registered partnerships) and are therefore obliged to report on their beneficial ownership. As such, those companies that were previously not subject to these requirements must now check the scope of their reporting obligations.
For the purposes of the AMLA, the reportable beneficial owner of an entity is any natural person:
- who owns more than 25% of the capital shares,
- who controls more than 25% of the voting rights, or
- who exercises control in a comparable manner.
The required information to be reported on the beneficial owner includes:
- first and last name,
- date of birth,
- place of residence, and
- nature and extent of the economic interest.
The manner in which the individual meets the threshold of a beneficial owner must be recognisable from the information provided, i.e. whether this is based, for example, on the amount of share capital or voting rights or on an agreement with third parties or other shareholders.
If no natural person can be identified as the beneficial owner, the legal representative or the managing partner is deemed to be the beneficial owner and must be reported as the “fictitious” beneficial owner(s) for entry in the Transparency Register.
Companies established after 31 July 2021 must report their data to the Transparency Register without delay. Transitional periods apply to companies that have only become subject to reporting requirements as a result of the amendment to the law. For these companies, the reports which were previously not required must be completed and filed. While the reporting deadline for stock corporations (AG), European Companies (SE) and partnerships limited by shares (KGaA) has already expired on 31 March 2022, companies in the legal form of a limited liability company (GmbH), registered cooperative (eingetragene Genossenschaft), European cooperative (Europäische Genossenschaft) and partnership (Partnerschaftsgesellschaft) must report their data to the Transparency Register by 30 June 2022. Limited partnerships (KG), general partnerships (Offene Handelsgesellschaften), foundations (Stiftungen) and all other companies have a slightly later deadline of 31 December 2022.
Simple violations of the reporting and notification requirements can be punished by a fine of up to Euro 100,000. Serious, repeated or systemic violations may result in fines in the amount of up to several million Euro.
Interaction with the Transparency Register can only be made electronically by setting up a user account and after receiving a customer number all functions of the Transparency Register are available. People with powers of representation (including lawyers in the context of an attorney-client relationship) can, for example, enter details for beneficial owners or submit requests for inspection of the Transparency Register. Obligated persons (as defined in the AMLA) are entitled to do this if the inspection is carried out to fulfil their own due diligence obligations. Obligated persons must also submit a declaration of discrepancy if they become aware of differing data on beneficial owners.
The expansion of the Transparency Register and the abolition of the previous “fiction of notification” leads to significantly increased information being available on the Transparency Register, but also means an increased requirement for attention from companies. In addition to the required additional notification obligations, it should be noted that every change in personnel on the board of directors, management, or in the personal data which is subject to registration, must be reported not only to the commercial register, but also to the Transparency Register.
Should you have any further questions, please do not hesitate to contact your regular contact person at EHLERMANN RINDFLEISCH GADOW or Dr. Carolin Schmeding or Dr. Hauke Rittscher.
Your contact persons:
Dr. Carolin Schmeding
Dr. Hauke Rittscher