EU legislators back plans for public registers to list owners of companies

The move is part of an updated anti-money laundering directive (AMLD) which was endorsed by the European Parliament’s (EP) economic and monetary affairs and civil liberties committees on 27 January.

Proposed new rules to make it easier to trace transfers of funds were also approved, the EP said.

The EP said the AMLD, the fourth such directive (60-page / 24 MB PDF), will be the first time EU member states will be obliged to keep central registers of information on the ultimate ‘beneficial’ owners of corporate and other legal entities, as well as trusts, the EP said.

According to the EP, a beneficial owner is a person who “actually owns or controls a company and its activities and ultimately authorises transactions, whether such ownership is exercised directly or by a proxy”.

Central registers were not envisaged in initial anti-money laundering proposals by the European Commission, but were included by members of the EP in subsequent negotiations. The proposals also require banks, auditors, lawyers, real estate agents and casinos, “among others, to be more vigilant about suspicious transactions made by their clients”.

The EP said the central registers will be accessible to the authorities and “their financial intelligence units without any restriction”. So-called ‘obliged entities’, such as “banks conducting their customer due diligence duties”, will also have access to the registers. The general public will also have access, although the EP said “public access may be subject to online registration of the person requesting it and to a fee to cover administrative costs”.

“To access a register, a person will in any event have to demonstrate a ‘legitimate interest’ in suspected money laundering, terrorist financing and in ‘predicate’ offences that may help to finance them, such as corruption, tax crimes and fraud,” the EP said. “These persons, such as investigative journalists, could access information such as the beneficial owner’s name, month and year of birth, nationality, country of residence and details of ownership.”

Exemptions to access provided by EU member states will be possible “only on a case-by-case basis, in exceptional circumstances”, the EP said.

The AMLD also clarifies rules on "politically-exposed persons", which the EP said include individuals “at a higher than usual risk of corruption due to the political positions they hold, such as heads of state, members of government, supreme court judges, and members of parliaments, as well as their family members”. Where there are “high-risk business relationships with such persons”, “additional measures should be put in place” that could include establishing the sources of wealth and funds involved, says the text.

The AMLD must now be endorsed by the EP as a whole and the EU Council of Ministers. EU member states will then have two years to transpose the AMLD into national laws.

According to the EP, money laundered each year amounts to between 2% and 5% of global gross domestic product.

Following a pledge to the G8 group of nations the UK government is introducing a register of people with significant control over companies. Under the Small Business, Enterprise and Employment Bill companies will be required to keep the register from January 2016 and an obligation on them to file this information at Companies House will take effect from April 2016.

The measure would apply to 'beneficial owners', meaning those who hold 25% of a company's shares or voting rights or who exercise control over the company's management.