Although the provisions of the Money Laundering Act for the introduction of the transparency register have been in force since October 1, 2017, the transparency register has recently come back into focus. We would like to take this opportunity to report on the background as well as current developments and risks:
1. Background
The Money Laundering Act requires in particular legal entities such as the GmbH or the AG and commercial partnerships such as the oHG or the limited partnership to collect, store, update and publish information on the beneficial owners behind the company in the transparency register. The purpose of the law is to combat money laundering and terrorist financing.
In particular, the beneficial owner is the natural person who directly or indirectly holds or controls more than 25 percent of the capital shares or voting rights in the company. If a beneficial owner cannot be determined according to these criteria, the legal representative, for example the managing director of the GmbH, may also be considered the beneficial owner.
The following information about the beneficial owner is published: first and last name, date of birth, place of residence, type and extent of economic interest and nationality.
It is a great relief for companies that the notification requirements to the transparency register are deemed to have been met if the essential information on the beneficial owner can be found in other electronically accessible registers, such as the commercial register. This is referred to as the so-called deemed notification.
The transparency register is operated on the internet at www.transparenzregister.de by Bundesanzeiger Verlag GmbH as a entrusted third party. The Federal Office of Administration supervises the transparency register.
2. Current developments and risks
2.1 Extended access to the register
The transparency register was previously only accessible to a limited group of people, in particular supervisory authorities, law enforcement authorities, the Federal Central Tax Office, local tax authorities and other persons who can demonstrate a legitimate interest in inspecting the register to theWith effect from January 1, 2020, the transparency register was opened to everyone, in particular with regard to entries of legal entities and commercial partnerships, without the need to demonstrate a legitimate interest.
Exceptions continue to exist if the beneficial owner demonstrates in the context of an application to the registry that, in an individual case, their own legitimate interests preclude publication. The bar for this is set high; in particular, a purely economic interest in confidentiality, for example in the case of holdings held in trust, is unlikely to be sufficient.
2.2 Fine proceedings
Violations of the obligations of companies to comply with the transparency register are subject to fines. The Federal Office of Administration has recently been increasingly addressing possible violations.
The uncertainty that exists at many companies with regard to the obligations under the Money Laundering Act and the resulting concern about fines are currently being exploited by fraudsters. On January 21, 2020, for example, the Federal Ministry of Finance warned on its website that fraudsters are writing to companies by email under the name "Organization Transparency Register e.V." and, while presenting legal details, are pointing out the reporting obligations to the transparency register and, in particular, existing risks of fines if reporting is not carried out. The e-mails suggest to the recipient that the reporting requirements can be fulfilled by registering, subject to a fee, on a website operated by the fraudsters.
2.3 Presumed notification, in particular for limited partnerships
Although the fiction of notification makes things easier in practice, both the legal regulation and the administrative practice of the Federal Office of Administration have pitfalls in the details.
The Federal Office of Administration considers it necessary for limited partnerships not only to state the amount of liability of each limited partner, but also the amount of each capital contribution. This information is not usually available in the commercial register, so that the fiction of notification does not apply and a supplementary notification to the transparency register is necessary.
Furthermore, it should be noted that not all of the information that can be accessed electronically in the commercial register triggers the deemed notification and thus an exemption from the obligation to report to the transparency register. For example, the numerous contents of the so-called document view of the electronic commercial register do not fall under the deemed notification.
3rd recommendation
In light of the increasing activity of the Federal Office of Administration in this area, as well as the complex problems that arise in detail with regard to both the question of determining the beneficial owner and the question of whether a separate notification to the transparency register has been settled on the basis of the deemed notification, we recommend that the fulfillment of the obligations under the Money Laundering ActCheck with a lawyer to ensure compliance with the Money Laundering Act in each individual case.
The statements represent initial information that was current for the law applicable in Germany at the time of initial publication. The legal situation may have changed since then. Furthermore, the information provided cannot replace individual advice on a specific matter. Please contact us for this purpose.