Transparency Registry – An Underestimated Obligation
The Transparency Register is a database that can be used to identify any natural person who owns or controls a legal entity or other legal arrangement. As of January 1, 2020, the Anti-Money Laundering Act (AMLA) and, in particular, the regulations governing the Transparency Register were amended. Below, we outline the most important points regarding the Transparency Register, the significance of which is still widely unknown or underestimated.
1. Existing Obligations: Parties Required to Report
Pursuant to Section 20(1) of the AMLA, the following companies or associations are required to report to the
Transparency Register:
GmbH, UG (limited liability), AG,
registered associations, cooperatives, foundations with legal capacity),
OHG, KG, GmbH & Co. KG, partnership firms,
trustees or administrators of other legal arrangements.
In principle, every company is therefore required to register, with the exception of the GbR.
2. What or who must be reported?
The reporting obligation in the Transparency Register aims to disclose which natural person is behind a company. In this context, the law uses the term “beneficial owner,” which is defined in more detail in § 3 GwG. According to § 3 GwG, beneficial owners are always natural persons. In the transparency register, beneficial owners must be reported with the following information: first and last name, date of birth, place of residence, nature and extent of the economic interest, and, under certain circumstances, nationality. For legal entities and partnerships, the following natural persons are considered beneficial owners:
Shareholders who hold, directly or indirectly, more than 25% of the capital shares,
voting rights holders who directly or indirectly control more than 25% of the voting rights,
persons who exercise control in a comparable manner (e.g., through trust agreements, pooling agreements, or voting agreements).
An indirect interest is attributed to a natural person if the person exercises actual control over the intermediate company. This is presumed if the person holds more than 50% of the capital and voting rights in the intermediate company.
In the case of legally recognized foundations and trust arrangements, beneficial owners include, for example, the founder of a trust foundation as the settlor, a foundation board member, a beneficiary natural person, any natural person who exercises, directly or indirectly, a controlling influence over the economic distribution.
3. Reporting Deadline
The notification must be submitted electronically and should have been entered in the transparency register by October 1, 2017, at the latest. From this date forward, it must be tracked who was or is the beneficial owner. If no entry was made by October 1, 2017, it must be submitted retroactively.
4. Exceptions to the Reporting Obligation (Deemed Reporting)
Pursuant to Section 20(2) of the Anti-Money Laundering Act (GwG), no report to the Transparency Register is required if the following conditions are met:
All necessary information must be electronically accessible from publicly available registers, e.g., the Commercial Register or the Business Register.
For limited liability companies (GmbHs), the presumption of registration applies if the list of shareholders is filed electronically, contains all information required under Section 40 of the Limited Liability Companies Act (GmbHG), and the information is correct.
For partnerships, the presumption of registration applies only in exceptional cases, as the Commercial Register shows only the liability amount and not the mandatory contribution or the capital share. The presumption of registration could apply, for example, to a one-person GmbH & Co. KG or a GmbH & Co. KG without a beneficial owner. A detailed review is required.
5. Legal Consequences of Violations
Violations of the reporting obligations constitute an administrative offense. Fines can range up to EUR 100,000.00. In addition, final fine decisions are to remain published on the supervisory authority’s website for five years.
6. Access to the Transparency Register
Supervisory and law enforcement authorities are authorized to access the transparency register. Under certain conditions, those required to report are also authorized to access it.
7. Recommended Action
Registration in the Transparency Register may also be carried out by an authorized representative (e.g., a tax advisor or attorney). We would be happy to first check for you whether you are required to file a report or whether the presumption of reporting applies. If a report is necessary, we can also handle the registration in the Transparency Register for you—just let us know.