- Conformity table between the CERTIFIX Universal definitions used in CERTIFIX and the EU AML Directive 849/2015, as amended by Directive 843/2018 (including Accounting Directive 2013/34/EU)
- Conformity table between the CERTIFIX Universal definitions used in CERTIFIX and the 2014 FATF Guidance on Transparency and Beneficial Ownership and related FATF documents
- Conformity table between the CERTIFIX Universal definitions used in CERTIFIX and the OECD Beneficial Ownership Implementation Toolkit of March 2019
Conformity table between the CERTIFIX Universal definitions used in CERTIFIX and the EU AML Directive 849/2015, as amended by Directive 843/2018 (including Accounting Directive 2013/34/EU)
DIRECTIVE (EU) 2015/849 of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, as amended by Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 (the Antimoney Laundering Directive or the AML Directive).
The Antimoney Laundering Directive obliges all legal persons and arrangements without legal personality to know their beneficial owners and beneficial ownership interest; such obligation, if it is to have an useful effect “effet utile” has to entail, on the side of the legal person or arrangement without legal personality to keep or have access to relevant documents evidencing the information on beneficial owner(s) and beneficial interest held by them. At the same time, the Antimoney Laundering Directive puts the onus on Member States when it obliges them to ensure that information on beneficial ownership interest held in central registers is adequate, accurate and current*. Directive 2015/849/EU provides a sufficiently clear and precise definition of the beneficial owner, which is based on the FATF definition, but adds in respect of different corporate subjects, namely corporate entities, trusts and non-profit legal persons, the indications of the persons who shall be considered as beneficial owners in relation to these corporate subjects.
The Beneficial owner – the natural person is expressly defined in the relevant provisions of the Antimoney Laundering Directive. The ultimate public organization is not defined in the same general way, but in a number of individual directly applicable EU Regulation imposing sanctions on third-states and third-states individuals, public or private legal persons or entities.** Regarding the corporate entities it also provides an exception for companies listed on a regulated market that is subject to disclosure requirements consistent with Union law or subject to equivalent international standards which ensure adequate transparency of ownership information and defines what direct ownership*** and indirect ownership**** means, setting under both definition a threshold of 25 % plus one share of the shares or voting rights or ownership interest in that entity as the limit above which the shareholding interest is relevant for consideration as an element of direct or indirect ownership.
By contrast, Directive 2015/849/EU, as amended, does not define the corresponding notions of ownership and control structure or the notion of the beneficial ownership interest. Yet, it imposes upon financial institutions and other obliged entities the obligation to check the control and ownership structure of their clients***** and upon all legal persons the obligation to register in the newly created registers of beneficial owners their beneficial ownership interest next to their beneficial owners. In addition, the Directive stipulates that the information on beneficial owner and the nature and extent of the beneficial interest held be accessible to public authorities, obliged entities and any member of the general public.******
Yet, mere identification of corporate subjects in the ownership structure and beneficial owners is not sufficient. Neither the obliged entities nor public registers of beneficial owners under Directive 2015/849/EU as amended, can content themselves with mere declarations of honour on who the beneficial owners are and what the nature and extent of their direct or indirect beneficial interest is. The requirement of evidencing of ownership structure and beneficial owners results from Art. 30 (4) of Directive 2015/849 which prescribes that the information about beneficial owners and their interests held in central register have to be adequate, accurate and current; its recital 14 stipulates that Member States may decide that obliged entities are responsible for filling in the register, the disclosure of the nature and extent of direct and indirect beneficial interest of beneficial owners will have to be evidenced.
Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings
The Accounting Directive provides for a threshold of 20 % for the purpose of determination of a group which is obliged to draw up consolidated financial statements*******. Also the Accounting Directive, when defining groups which are obliged to draw up annual financial statements provides for certain material criteria of control.
* Art. 30 (4) AML Directive.
** List of sanctions imposed by the EU http://eeas.europa.eu/cfsp/sanctions/consol-list/index_en.htm.
*** A shareholding of 25 % plus one share or an ownership interest of more than 25 % in the customer held by a natural person shall be an indication of direct ownership.
**** A shareholding of 25 % plus one share or an ownership interest of more than 25 % in the customer held by a corporate entity, which is under the control of a natural person(s), or by multiple corporate entities, which are under the control of the same natural person(s), shall be an indication of indirect ownership.
***** Art. 13 (1) (b) Dir 2015/849.
****** Article 30 (5) Dir 2015/849.
Conformity table between the CERTIFIX Universal definitions used in CERTIFIX and the 2014 FATF Guidance on Transparency and Beneficial Ownership and related FATF documents
The beneficial owner in the FATF context is defined as follows: “the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted”; the definition also includes those persons who exercise ultimate effective control over a legal person or arrangement”.* The process of identification and verification of the beneficial owner and ownership and control structure was described in an interpretative note to Recommendation 5. ** Currently, the definition of the beneficial owner and the reference to a control and ownership structure is contained in the version of FATF Recommendations of 2012***, the issue of beneficial ownership of legal persons and arrangements appeared in Recommendations 10 (on customer due diligence), 24 (on beneficial ownership of legal persons) and 25 (on beneficial ownership of legal arrangements).**** Currently, an indirect explanation of the meaning of the terms ownership and control structure and the beneficial ownership interest is given in the 2014 FATF Guidance on Transparency and Beneficial Ownership.***** These guidelines clarify that the expressions “ultimately owns or controls” and “ultimate effective control” refer to situations in which ownership or control is exercised through a chain of ownership or by means of control other than direct control. ****** The term beneficial owner and the ownership and control structures first appeared at supranational level in the 2003 Revised Forty Recommendations******* of the Financial Action Task Force. ********
* FATF Glossary. Available at: http://www.fatf-gafi.org/glossary/
** Interpretative notes to the 2003 revised FATF Recommendations in W.C. Gilmore, ‘Dirty Money – The evolution of international measures to counter money laundering and the financing of terrorism’, (2012), 4th ed., Council of Europe Publishing, 305-307.
*** FATF Recommendations, adopted on 16 February 2012, and updated in February 2013, October 2015, June 2016 and October 2016.
**** Financial Action Task Force which exists as of 1989 represents a specialized international organization in the area of prevention of money laundering and financing of terrorism, including ownership structures and beneficial owners.
***** The term beneficial owner is defined in chapters IV, and the terms beneficial ownership information are defined with respect to legal persons and legal arrangements in chapters V and VI respectively of the FATF Guidance on Transparency and Beneficial Ownership.
****** FATF Guidance on Transparency and Beneficial Ownership, Box 1, 8.
******* Recommendations 5, 33 and 34.
******** Financial Action Task Force is an intergovernmental organization existing since 1989, with headquarters in Paris, specialized in the fight against money laundering.
Conformity table between the CERTIFIX Universal definitions used in CERTIFIX and the OECD Beneficial Ownership Implementation Toolkit of March 2019
The OECD Beneficial Ownership Toolkit of March 2019 was jointly developed by the Secretariat of the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) and the Inter-American Development Bank (IDB). Some portions of the toolkit include material (including graphics) from a recent IDB publication on the regulation of beneficial ownership in Latin America and the Caribbean. One aim of this toolkit is to foster understanding of beneficial ownership as contained in the international tax transparency standards. A second aim is to provide awareness of laws in different jurisdictions, which are adapting their legislation and regulations to comply with new international transparency measures. This toolkit is not meant to address beneficial ownership requirements laid down under other international standards.
Concretely, Part I explores the concepts of beneficial owners and ownership, the criteria used to identify them, the importance of the matter for transparency in the financial and non-financial sectors, and the obstacles that may arise when efforts are made to identify beneficial owners. Given the connection between the FATF and Global Forum standards on beneficial ownership, Part II defines and describes the FATF recommendations on transparency with regard to beneficial owners and their linkages with Global Forum standards. Part III examines technical aspects of beneficial ownership requirements, distinguishing between legal persons and legal arrangements (such as trusts), and describes measures being taken internationally to ensure the availability of information on beneficial ownership. This Part contains very useful cascading test how to identify a controlling person. Part IV provides a series of checklists that may be useful in pursuing a specific beneficial ownership framework. Part V looks at various ways in which these principles on beneficial ownership can play out in practice in Global Forum EOIR peer reviews. Part VI explains why beneficial ownership information is also a crucial component of the AEOI regimes being adopted by jurisdictions around the world in relation to financial account information under the Common Reporting Standard (CRS). Part VII notes several technical assistance options available to jurisdictions.
* The Financial Action Task Force (FATF) evaluates jurisdictions for compliance with anti-money laundering and combating terrorist financing (AML/CFT) standards. The purpose for which the FATF materials have been produced (combating money-laundering and terrorist financing) is different from the purpose of the EOIR standard (i.e. ensure effective exchange of information for tax purposes), such that this toolkit merely addresses the implementation of beneficial ownership requirements under the Global Forum standards.