Webinar - UBO Registers: Quo Vadis? Despite the shortcomings and difficulties, How can the data be used in the fight against Financial Crime

Identification and verification of Ultimate Beneficial Owners (UBO) of legal entities remains a hot topic among both the AML regulated sectors and corporations complying with the ABC and International Sanctions regimes. Governments, too, are catching up with the trend by either introducing or upgrading the beneficial ownership legal frameworks and related registries.

Until 2018, there was no obligation in the EU to declare who was behind a company. It was only following publication of the Panama Papers, a huge leak of confidential information on more than 200,000 offshore companies and their shareholders, that the European Commission moved to introduce greater transparency standards.

“Public access to beneficial ownership information allows greater scrutiny of information by civil society, including by the press or civil society organizations,” the commission said at the time. Today, a veil of caution has descended on the Berlaymont building. “The Commission will thoroughly analyze the implications of the judgment in order to assess what amendments are required to the EU framework,” a spokesperson said.

After lengthy negotiations, the European Council found a qualified majority to make ‘beneficial ownership’ registers mandatory for member states in 2018. The problem is that countries were left free to create their own registers. The result has been a patchwork of unconnected ‘beneficial owners’ registers, which, only in theory, are accessible to the public.

In practice, in many cases, one has to pay to know the identity of a company’s owners.  Only Denmark, Estonia and Latvia have made their registers available in open data, the golden  standard for transparency, while other countries have introduced access restrictions. For example, in Germany or Hungary, one has to pay for data. In Belgium or Portugal, one must be a resident to interrogate BO registers. Before its shutdown, the Luxembourg register limited searches by company name or number. There was no possibility to search by the name of a person to check for all companies that person owns in Luxembourg.

Italy has had a law ready since 2018, but it is yet come into force. “The UBO register will not solve all the problems, it will report the names of the beneficial owners of the companies in Italy”, Professor Michele Riccardi of the Transcrime research centre at the Catholic University in Milan says. “But if one needs to do an analysis of an ownership structure, to also understand any anomalies related to the ownership structure, the BO register can be only of little help”.

Despite these developments on the legal and registry fronts, the obligated institutions however are still facing significant practical challenges.

Three key practical challenges for businesses in meeting their UBO obligations are: availability, accessibility and reliability of Beneficial Ownership (BO) information.

While several EU nations rushed to close their registers in recent days, existing rules contain glaring loopholes, making such scrutiny of corporate structures already difficult. First, the obligation to declare their beneficial owners is only for companies registered in the country. It does not apply to foreign companies with no domestic legal presence in the country. The other big loophole is that the registers are obligatory only for individuals owning 25% of shares or more. In Luxembourg, where investment funds manage some trillion euros in assets, Transparency International found 81% of them did not declare any beneficial owner. And even when the name of a physical person is indicated, there is no guarantee that it is the true owner, it could simply be a middleman, a lawyer or the fund administrator. And even with better rules and implementation, there is still a long way to full transparency on whom owns the building next door. The problem is that the beneficial ownership registers only apply to company shares and do not include assets like properties or luxury goods. So, one can learn who manages a real estate fund, but not what properties this fund owns and, especially, how it bought them. 

Criminals always hide behind a variety of complex ownership structures that can be hard to wade through. Given the challenges in accessing reliable UBO data, companies need a cost-effective global solution that addresses the availability, accessibility, and reliability gaps in data.

GACO is therefore happy to have been able to engage SGR Compliance, an international Company specialised in Compliance and combatting Financial Crime, to deliver a webinar on this topic that will provide insights into advantages and limits of the existing UBO registers and, above all, on how you can process the information from those in a simple manner, and make it useful for your KYC/CDD Process.

The Speakers

Thomas Maj

Economist with an Extensive Experience in SGR Compliance offering Guidance and Support to Financial Intermediaries and Obligated Entities in obtaining and identifying Crucial Information for KYC and Due Diligence Processes; M.Sc. in International Relations – Economics of Sustainable Development; B.Sc. in Economics and Finance – International Monetary Economics.

Nicole Torre

Professional Consultant in SGR Compliance dedicated to supporting FIs to ensure efficient and accurate access to Relevant Information for AML/CFT Processes; holds an M.A. in International Communication and a B.A. in Interlinguistic and Intercultural Mediation.

Date: 26th October 2023
Time: 9.30hrs - 11.00hrs
Fees: £30 for GACO Members; £50 Non-GACO Members