Prevention of money laundering - change in the law as of August 01, 2021 Obligation to report to the transparency register
In implementation of the European Directive 2019/1153 on the use of financial information to combat money laundering, terrorist financing and other serious crimes, the German Bundestag passed the so-called Transparency Register and Financial Information Act (TraFinG) on June 10, 2021. Approval by the Bundesrat took place on June 25, 2021, the law was promulgated on June 30, 2021 and came into force on August 01, 2021.
The amendment changes the transparency register to a full register. As a result, obligated parties are required to notify the electronic transparency register of the beneficial owner(s). This reporting obligation applies irrespective of whether this information already results from other public registers (commercial register, partner register, etc.) (Section 20 (2) GwG old version therefore no longer applies).
The goal of the transparency register is to prevent the concealment of illegal assets with the help of complex company constructions. At the same time, the European networking and usability of the register is to be increased. Obligated parties will also benefit from it on a case-by-case basis to fulfill their own due diligence obligations.
For companies that are required to report for the first time as a result of the amendment to the Act, the reporting obligation applies with the following transitional periods (Section 59 (8) GwG new version):
- For stock corporations (AG, SE or KGaA) until March 31, 2022
- For limited liability companies or partnerships until June 30, 2022
- in other cases (e.g. registered partnerships) until December 31, 2022
The associated provisions on fines in the event of violations of the obligation to make an initial report are currently suspended and will become active again after the deadlines listed above (Section 59 (9) GwG n.F.) However, the transitional provisions are only to apply to those associations that are not required to report their beneficial owners to the transparency register under the current legal situation. Otherwise, the beneficial owner must be notified to the transparency register without delay.
The information on beneficial owners must also be kept up to date in the future (change notifications). Any natural person is the beneficial owner of a legal entity that directly or indirectly holds more than 25 percent of the capital shares or voting rights of a company or has partial control in a comparable manner. This also includes so-called fictitious beneficial owners.
We will be happy to help you with the implementation.
Author: Attorney at Law Dennis Wiegard
Düsseldorf, August 09, 2021