the luxembourg register of beneficial owners · rbo law refers to article 1(7) of aml law so need...
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The Luxembourg Register of Beneficial Owners 24 April 2019
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2 Outline
I. Setting the scene
II. Identifying the Ultimate Beneficial Owner (« UBO »)
III. Investment fund specifics
IV. UBO in a private equity scenario
V. Default solution: the senior managing official(s)
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3 I. Setting the scene: legal framework
RBO specific legal framework
- Law of 13 January 2019 creating a Register of beneficial owners
- Grand-Ducal Regulation of 15 February 2019
- Guidance issued by RBO: Circulars LBR 19/01 and 19/02 (non-profit associations), technical user guides, FAQ
AML legal framework - Amended law of 12 November 2004 on the fight against money laundering and terrorist financing
- Grand-Ducal Regulation of 1 February 2010
- CSSF Regulation No.12-02
- EU Directives: AMLD4 and AMLD5
- FATF Recommendations
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4 I. Setting the scene: main features of the RBO Law
Obliged entities = all entities registered with the RCS (no natural persons)
Transition period until 31/08: no filing obligation or fee before that date
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5 I. Setting the scene: main features of the RBO Law (2)
File UBO info with RBO
Keep UBO info at registered office
Update filing (and info at registered office)
Triple obligation
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6 I. Setting the scene: main features of the RBO Law (3)
Who?
Obliged entity must file to RBO and keep info - > can delegate RBO filing to third party
UBO must provide info to obliged entity
Exemption from filing of UBO info for listed companies
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7 I. Setting the scene: main features of the RBO Law (4)
Information accessible to (i) national authorities and (ii) the general public (save for certain data)
Possibility to request limitation of access (max. 3 years):
Duly reasoned application - “exceptional circumstances”:
- Minors or incapacitated UBOs: no additional proof
- Others: prove exposure to disproportionate risk (fraud, kidnapping,
blackmail, extortion, harassment, violence or intimidation)
National authorities still have access
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8 I. Setting the scene: main features of the RBO Law (5)
Criminal fine of EUR 1,250 to EUR 1,250,000 on
(i) obliged entity for failure to comply, or
(ii) UBO for failure to provide entity with necessary information
Strict interpretation of UBO law given criminal law character
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9 II. Identifying the UBO: definition is key
RBO Law refers to Article 1(7) of AML Law so need to be consistent
UBO = natural person(s) ultimately owning or controlling a legal entity:
- through sufficient percentage (25%+1) of shares or voting rights (presumption)
- first quantitative analysis (direct or indirect)
- then qualitative analysis - verify if control through other means (e.g. right to appoint/remove majority of board)
- senior managing official(s) if no UBO on ownership/control criteria
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10 I. Identifying the UBO: definition is key (2)
LuxCo
UBO = natural person(s) holding 25%+1
of shares/voting rights or otherwise controlling
(direct ownership)
Natural person(s)
Corporate entity A (>25%)
UBO = natural person(s) holding
indirectly 25%+1 or controlling corporate entity A
(indirect ownership)
Corporate entity B (≤25%)
No UBO
held by
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11 II. Identifying the UBO: definition is key (3)
LuxCo
UBO =
i. the settlor;
ii. any trustee;
iii. the protector, if any;
iv. the beneficiaries, or where the individuals benefiting from the legal arrangement or entity have yet to be determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates;
v. any other natural person exercising ultimate control over the trust by means of direct or indirect ownership or by other means.
Trust or fiducie (>25%)
Foundation or legal arrangement similar
to trust (>25%)
held by
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12
II. Identifying the UBO: the filing form
Scenario 1: calculating indirect control
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13 II. Identifying the UBO: case of direct ownership
Mr. A Ms. B Mr. C
30% 20% 50%
LuxCo A
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14 II. Identifying the UBO: case of direct ownership
Mr. A Ms. B Mr. C
30% 20% 50%
LuxCo A
+51% voting rights
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15 II. Identifying the UBO: case of direct ownership (2)
Mr. A Ms. B Mr. C
25% 25% 25%
LuxCo A
Ms. D
25%
Check shareholders
agreement
If no control, senior
managing official(s) of
Luxco A
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16 II. Identifying the UBO: case of indirect ownership
Ms. A
Ms. C
70% 30%
60%
Company B
LuxCo A
40% * 30% = 12%
60% * 30% = 18% but Ms. C
controls Company B
Mr. B
40%
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17 II. Identifying the UBO: case of indirect ownership (2)
Ms. A
70% 30%
60%
LuxCo A
Mr. B
40%
Numerous natural persons*
Company C
Company B
* none holding >25%
No UBO above Company C
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18 II. Identifying the UBO: case of listed company
Ms. D
100%
80%
LuxCo B
(listed)
LuxCo A
LuxCo C
30%
Luxco B: info on regulated
market
Luxco A: no UBO identified
Luxco C: UBO identified
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19 II. Identifying the UBO: case of ownership by a trust
100%
UBO = settlor, trustee, protector, beneficiaries (or class), or other natural person exercising ultimate control over the trust
Makes no difference if Trust C
beneficiaries have +25%
interest or not
Only natural persons will be
filed
Company B
Trust C
LuxCo A
> 25%
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20 III. Investment funds specifics
Treatment of fund compartments
Does the Manco have control?
How to deal with nominees
RBO v. AML approach
Delegation of the filing
Further practical guidance to be expected? ALFI – CSSF discussions
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21
Indirect Holder 4/ Listed company on a regulated market
Indirect Holder 3/ Natural Person
Indirect Holder 2/ Holding Company
Indirect Holder 1/ Natural Person
Investor 1
Investor 2/ Natural Person
Investor 3/ Nominees/Investment Firm (DPM)
Fund
IFM
95% 5%
25% 30% 45%
III. Investment funds specifics (2)
95% 5%
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22
Nominee/ Distributor
Listed company on a regulated market
Fund
IFM
III. Investment funds specifics (3)
Natural Person
Holding Company
Natural Person
Natural Person
Natural Person
Natural Person
Natural Person
6.5% 6.5% 6.5% 6.5%
14% 26% 40% 20%
100%
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23
Nominee/ Distributor
Listed company on a regulated market
Fund
IFM
III. Investment funds specifics (3)
Natural Person
Holding Company
Natural Person
Natural Person
Natural Person
Natural Person
Natural Person
14% 26% 40% 20%
100% ?% ?% ?% ?%
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24
Natural Person
Holding Company
Insurance Company
Nominee
Natural Person
Feeder Fund
Bank (DPM)
Fund LP
General Partner
AIFM
74% 26%
51% 9% 40%
95% 5%
III. Investment funds specifics (4)
?
100%
Natural Person
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25 IV. UBO in a private equity scenario
HoldCo Lux S. à r. l.
Lux S. à r. l. Real estate 1
Fund Lux S.C.S.
GP Lux S. à r. l.
Limited Partners (none holding >25%)
Lux S. à r. l. Real estate 2 100% 100%
LP
100%
100% GP
US Invest. Man. LLC
US listed company
100%
100%
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IV. Default solution: the senior managing official(s) Who is(are) senior managing official(s)?
Natural person
Always of the obliged entity (not of upstream controlling entity)
« After having exhausted all possible means »
Circular 19/02 (non-profit associations): entire board and not only the president of the board or the members of an executive committee
Cannot be generalised in our view: only if board is collegial body and no one is mandated for daily management, entire board identified in RBO: case-by-case analysis needed
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27 Closing remarks
Keep evidence of diligence applied in obtaining information up the control chain
-> one cannot be expected to do the impossible
Obligation for « AML professionals »: have to report erroneous data or the absence thereof noted when accessing the RBO (no fine)
Still some time but preparations should start!
!
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28 Questions?
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29 Your speakers
ELVINGER HOSS PRUSSEN, société anonyme | Registered with the Luxembourg Bar | RCS Luxembourg B 209469 | VAT LU28861577
SOPHIE DUPIN Partner [email protected] Tel: +352 44 66 44 5464
PIT RECKINGER Partner [email protected] Tel: +352 44 66 44 2321
GAST JUNCKER Partner [email protected] Tel: +352 44 66 44 5333
ANDRE HOFFMANN Partner [email protected] Tel: +352 44 66 44 2312
KATRIEN VERANNEMAN Senior Associate [email protected] Tel: +352 44 66 44 2311
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30
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