The Transparency Register - a full register with immediate effect - new reporting obligation and fines of up to EUR 150,000

The Transparency Register and Financial Information Act (TraFinG) came into force on 1 August 2021. This revises the Money Laundering Act (GwG) and expands the group of persons affected who have to register as well as the scope of the reporting obligation.

The register thus becomes a full register. The reporting obligation is no longer satisfied by the fact that the required information can be retrieved via another publicly kept register such as the commercial register. Affected companies should review their compliance.

Failure to comply with the reporting obligations is a regulatory offence according to the statutory provision in Section 56 (1) Nos. 54 to 66 AMLA and thus subject to a fine.

The MLA provides for a fine of up to EUR 100,000.00 for reckless violations of the statutory obligations; up to EUR 150,000.00 for intentional violations (Section 56 (1) D. 2 MLA).

The transparency register is to record the beneficial owners of companies and associations specified in the Money Laundering Act (GwG). For this purpose, pursuant to sectis 20,21 AMLA, the information listed in section 19 (1) AMLA on the beneficial owners of these legal entities subject to the transparency obligation must be obtained, retained, kept up to date and communicated wthout  delayto the office keeping the register for entry in the tansparency register.

 

Legal entities subject to transparency pursuant to Section 20 AMLA are:

• Legal entities under private law (e.g. GmbH, AG) and registered partnerships

Legal entities subject to transparency pursuant to Section 21 AMLA are:

• Trusts

• Foundations without legal capacity if the purpose of the foundation is self-interested from the founders point of view

• Legal arrangements that correspond to such foundations in terms of their structure and function

 

Pursuant to Section 20 AMLA, the legal entities subject to the transparency obligation are themselves subject to the notification obligation. In the case of legal arrangements under Section 21 AMLA, the administrators of the trusts (trustees) and rustees are obliged to report.

The duty of notification shall in principle be fulfilled by the legal representatives of the company; it may also be fulfilled by legal representatives (e.g. authorisation within the scope of a mandate as tax advisor or lawyer).

Previously, a notification pursuant to Sections 20,21 AMLA to the transparency register was only necessary if the information on the beneficial owner did not result from existing, electronically retirevable entries in other registers, such as the commercial register or the register of associations. With the abolition of the so-called notification fiction, the German transparency register now becomes a full register. This means that legal entities subject to transparency requirements, which were previously able to rely on the notification fiction in Section 20 (2) AMLA, will now be required to enter the beneficial owners, which was previously unnecessary.

For those cases, the legislator has standardised transitional periods in Section 59 (8) AMLA, as amended. According to this provision, legal persons under private law and registered partnerships that were not obliged to notify the transparency register by 31 July 2021 are subject to transitional periods during which the information subject to notification must be notified to the register-keeping agency for entry in the transparency register:

Public limited companies, SEs and partnerships limited by shares must give notice of registration by 31 March 2022, limited liability companies, cooperatives and European cooperatives or partnerships must give notice of registation by 30 June 2022 and in other cases notice must be given no later than 31 December 2022.

For registered associations under Section 21 of the Civil Code (BGB), the office keeping the register shalll draw up an entry in the transparency register on the basis of the data entered in the register of associations without requiring seperate notification by the associations.

The following information on the beneficial owner is subject to notification: first and last name, date of birth, place of residence (not full address), country of residence, all nationalities, type of beneficial owner, as well as the type and scope of beneficial interest (cf. Section 19 (1) AMLA). Both changes to the information on the beneficial owner and relevant changes with regard to the legal entities suject to transparency that are not kept in the register are subject to notification (cf. Section 20 (2) AMLA).

Natural persons who alone or together with others hold more than 25% of the capital shares or control more than 25% of the voting rights must provide the necessary information to the legal representatives of associations and legal persons if they themselves are beneficial owners within the meaning of the MLA or are under the direct control of such a person (cf. Section 20 (3) MLA).

 

As tax advisors and lawyers for our clients, we support you in fulfilling the new reporting obligations and take over the entire reporting process for you. So please contact us.