Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 (the “4th AML Directive”) had to be implemented in the Member States at the latest on June 26th 2017.
However, the Luxembourg draft law of April 26th 2017 (the “Draft Law”) to implement the provisions of the 4th AML Directive is not formally adopted yet.
Most companies have already dealt with anti-money laundering and counter terrorist financing (“AML/CTF”) when working with professionals, such as lawyers or banks, within the meaning of the law dated November 12th 2004 on the fight against money laundering and terrorist financing, as amended from time to time (the “AML Law”), which constitutes the current applicable legal framework in Luxembourg; but are not directly subject to the obligations of the AML Law.
Implementation of the 4th AML Directive may change this fact.
Pursuant to recital 12 of the 4th AML Directive, “there is a need to identify any natural person who exercises ownership or control over a legal entity. In order to ensure effective transparency, Member States should ensure that the widest possible range of legal entities incorporated or created by any other mechanism in their territory is covered.“
This clearly demonstrates a will to increase the scope of AML/CTF obligations as regards the identification of ultimate beneficial owners (“UBO”) so as to include as many corporate forms as possible.
Article 30 paragraph 1 of the 4th AML Directive provides that “Member States shall ensure that corporate and other legal entities incorporated within their territory are required to obtain and hold adequate, accurate and current information on their beneficial ownership, including the details of the beneficial interests held”.
In other words, legal persons must identify their own ultimate beneficial owners and the exact structure of ownership. Furthermore, such legal entities will have to keep such information updated. Compliance with such obligation will imply, from a practical standpoint, setting up adequate internal rules to ensure that information is always up-to-date.
In addition, the information on the UBO will have to be held in a central register.
At this stage, legal entities can reasonably expect that the UBO obligations, which are however not yet provided for in the Draft Law, will be implemented in Luxembourg with a new law modifying the AML Law. Even though the Draft Law does neither implement the obligation related to UBOs for legal entities nor the central register for UBOs, it does however implement the new definition of UBOs as per the 4th AML Directive.