The transparency rules on beneficial owners of legal entities (known as the UBO regulation) have recently been adjusted and complemented in different ways. The most eye-catching changes concern the limitation of access to the UBO information for the general public following a judgment of the Court of Justice of the European Union.
On 17 February 2023, an Act of 8 February 2023 and a Royal Decree of 8 February 2023 were published in the Belgian Official Gazette. These two legal instruments, which also entered into force on 17 February 2023, amended the UBO regulation in various respects. Below we provide a brief overview.
No more access for the “general public” without a legitimate interest
Originally, the UBO regulation provided access for “any member of the public” to the UBO information concerning Belgian legal entities (companies, (international) NPOs, foundations, trusts or similar legal arrangements). This possibility was introduced following the transposition of the fifth European Anti-Money Laundering Directive (“AMLD”, Directive 2018/843), and sought to allow more research involving that information (including by journalists or civil society organisations), with the aim of maintaining confidence in the integrity of business transactions and the financial system. In this way, the European legislator broadened access to UBO information, which initially (under the fourth AMLD) was reserved for those with a legitimate interest. Thus, the general public could access a large part of the UBO information without having to demonstrate a legitimate interest.
However, at the end of last year, the Grand Chamber of the Court of Justice of the European Union ruled that such free access by the general public constitutes a serious and unjustified interference with the fundamental rights to respect for private life and protection of personal data guaranteed by Articles 7 and 8 of the Charter of Fundamental Rights of the European Union (judgment of 22 November 2022 in cases C-37/20 and C-601/20, WM and Sovim SA). According to the Court, such public availability of UBO information makes it possible for a potentially unlimited number of persons to obtain information about the material and financial situation of ultimate beneficial owners. In addition, the potential consequences for the parties involved of any misuse of their personal data are exacerbated by the fact that – once made available to the general public – such data can not only be freely consulted but also retained and disseminated. Since the Court found the provision in the fifth AMLD (which amended the fourth AMLD in this respect) to be invalid, the original version of the Article (from the fourth AMLD) had to be reinstated.
Therefore, the amended Royal Decree of 30 July 2018 now stipulates that individuals and legal entities only have access (free of charge) to the UBO information of Belgian legal entities if they can demonstrate a legitimate interest. Article 10, §3 of the same amended Royal Decree specifies the reasons which meet the requirement of a legitimate interest when applying for access:
- the applicant has a purpose or carries out activities related to the fight against money laundering, financing of terrorism and related underlying criminal activities in a sustainable and effective manner;
- the applicant is acting in court in connection with the purpose or activities referred to under 1°, with a view to defending an interest related to that purpose or those activities; or
- the applicant will enter into an economic relationship or carry out transactions with a reporting agent (legal entity), is involved in activities relevant to the prevention of or the fight against money laundering, the financing of terrorism and related underlying criminal activities and does not yet have access to the register in another capacity.
In other words, the required legitimate interest refers to an activity which is related to the fight against money laundering, financing of terrorism and related underlying criminal activities. The Report to the King mentions that, in practice, such an application could be submitted, for example, by investigative journalists or NGOs who meet the conditions.
Other amendments
Besides the fundamental changes regarding access to the UBO information concerning legal entities, other matters are also clarified or complemented.
First, it is now explicitly clarified that the term “reporting agent” not only refers to the entities that are required to provide information to the UBO Register, but also to their legal representatives. For Belgian companies, non-profit organisations and foundations, these are the governing body and its members, as referred to in articles 1:35 and 1:36 of the Code of Companies and Associations (CCA). For trusts, fiduciaries and similar legal structures, these are the trustees, fiduciary managers or persons who have similar positions in such legal structures. When an entity from a third country is required to register in the Belgian UBO Register, the legal representatives are the bodies or persons designated by law applicable to them.
In addition, the UBO regulation was adapted to fully align the provisions with the concrete functioning of the UBO Register, i.e. functioning in a fully electronic manner. The Report to the King shows that this was done not only with the current situation in mind, but also to anticipate the future operation of the register when Chapter 11 of the Act of 26 January 2021 on the dematerialisation of relations between the Federal Public Service Finance, citizens, legal entities and certain third parties and amending various tax codes and laws comes fully into force (that Act relates to the digitalisation of the FPS Finance and, simply put, lays down the arrangements for electronic communication between the tax authorities and the taxpayer – see our previous contribution).
Furthermore, additional authorities are also granted access to the UBO Register. From now on, the register can also be consulted in the context of the application and control of obligations regarding embargoes, asset freezes and other restrictive measures as imposed by the United Nations, the European Union and national provisions.
Finally, the procedures for imposing, collecting and recovering administrative fines in case of non-compliance with the UBO regulation are also clarified. These are not fundamental changes, but represent the incorporation into the regulation of procedures that the administration has been applying in practice for a long time. The procedure starts with a notification by the administration of the existence of a potential infringement and of the fact that an administrative fine may be imposed in case of a final finding of infringement. That notification must be made within a period of 30 days following the formal establishment of the existence of the potential infringement. After that, the reporting agent may put forward a defence. The Minister or his/her delegate then makes a final decision. If the fine is upheld, the reporting agent is notified within three months following the decision.
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