14 September 2018

New Dutch anti-money laundering rules in force: name your ultimate beneficial owner (UBO)

The amended Dutch Act on the Prevention of Money Laundering and Terrorist Financing (WWFT), an implementing decree and an implementing regulation entered into force on 25 July 2018. The different definitions of UBO (or pseudo-UBO) for several categories of corporate or legal entity are summarised below.

Listed companies and their wholly-owned subsidiaries are exempt from the obligation to identify an ultimate beneficial owner (UBO). In the case of a foundation, only natural persons who have more than 25% ownership or voting rights, or have control, can be a UBO. The definition of a UBO used in Dutch anti-money laundering legislation has been laid down in the implementing decree.

Companies now need to put processes in place to identify their UBO or pseudo-UBO on the basis of the new AML rules.

Who qualifies as a UBO or a pseudo-UBO?

The amendment of the WWFT is based on the Fourth European Anti-Money Laundering Directive. The implementing decree defines for each type of legal entity what a UBO means. Each legal entity has its own definition of a UBO, but common across all these definitions is that the UBO is a natural person who ultimately owns or controls the entity. If a corporate or legal entity has no UBO, the individual or individuals who is or are managing director will be regarded as the senior official or senior officials; this person is known as a ”pseudo-UBO”. Where there is a partnership, one or more of the partners will be appointed as pseudo-UBO. Below we explain the definition of UBO for specific categories of enterprises.

Companies

At a company, the UBO is a natural person who has an interest in the entity of more than 25% through direct or indirect ownership, or who controls the company.

Listed companies exempted

Listed companies are exempted from the obligation to appoint a UBO or a pseudo-UBO. This exemption equally applies to wholly-owned subsidiaries of listed companies. Other subsidiaries or group companies are not exempted from appointing a UBO or pseudo-UBO.

Foundations, associations, mutual benefit associations and cooperatives

A natural person who directly or indirectly has more than 25% of ownership, or is entitled to more than 25% of the votes on an amendment of the articles of association, or has control of the entity, is appointed as UBO of that foundation, association, mutual benefit association or cooperative.

Partnerships

For enterprises featuring partnerships, the UBO is a natural person who directly or indirectly has more than 25% of the ownership, or is entitled to more than 25% of the votes, or has control of the partnership.

When will the UBO or pseudo-UBO need to be registered?

A UBO or pseudo-UBO will have to be registered with the Dutch Trade Register as soon as the amended Trade Register Act comes into force, expected in 2019. UBOs or pseudo-UBOs do not have to be registered at the moment.

What are the consequences of the new legislation for your company?

The new legislation will impact the privacy of natural persons due to UBO information becoming publicly available. Entities which do not have a UBO must appoint one or more managing directors (natural persons) as pseudo-UBO.

What is the status of the central shareholders register?

The implementation of a central shareholders register in the Netherlands has been postponed. It is uncertain if and when the central shareholders register will be in place; however it is certain that this will be after implementation of the UBO register.

These changes may have consequences for shareholders and others in your business. We are available to discuss and provide guidance on the effects of these changes, as well as advise on possible privacy-related measures stemming from UBO registration. We will closely monitor and keep you informed on any further developments.