In connection with the implementation of the Fourth EU Anti-Money Laundering Directive the German federal government has resolved to create a central electronic transparency register, designed to increase transparency of the ownership in companies and other legal entities. Respective provisions are included in the draft of a completely revised German Anti-Money Laundering Act (Geldwäschegesetz, GwG), which constitutes the centrepiece of a draft “Act on the implementation of the Fourth EU Anti-Money Laundering Directive (EU 2015/849), on the execution of the EU Regulation on the Transfer of Funds (EU 2015/847), and on the reorganisation of the central agency for financial intelligence“ which was adopted on 22 February 2017. In addition, the draft legislation defines additional requirements for shareholder lists of German limited liability companies (GmbHs). These provisions are aimed at more effectively combatting money laundering or terrorism financing.

The transparency register is envisaged to contain information on the beneficial owners of (amongst other entities and structures) corporations and registered partnerships as well as on the type and extent of such beneficial owners’ economic interests. It applies, in particular, to stock corporations (AGs), limited liability companies (GmbHs) and limited or general partnerships (KGs, OHGs). Beneficial owner means any individual who directly or indirectly holds more than 25% of the capital interests, directly or indirectly controls more than 25% of the voting rights, or exerts control in a comparable manner. Control is presumed, for example, in the event of certain formal or informal agreements between a shareholder or partner and a third party or amongst shareholders or partners such as, for instance, trust agreements or agreements on the exercise of voting rights. If a beneficial owner cannot be clearly identified, the legal representatives or managing partners of the concerned entity are deemed to be its beneficial owners. The factual basis on which, in accordance with these parameters, beneficial ownership is founded, must be reflected in the transparency register. This means, that in future trust agreements and certain shareholder agreements must be notified, and shown in the transparency register, by any company or registered partnership regardless of whether or not it uses the capital markets.   

The entities being subject to the new rules must obtain, store and keep the required information updated and to notify it to the transparency register. The notification duties also extend to subsequent changes. They are, however, limited to information which is known by the respective entity or which has been provided by its owners. There is no need for the entity to conduct its own investigations. Consequently, shareholders who are themselves, or are directly controlled by, beneficial owners, are obliged to furnish the respective entity with the relevant information. Any obligation to notify information to the transparency register is deemed to be fulfilled, if the respective details are electronically available in any other public register such as, for example the commercial register (Handelsregister) or the company register (Unternehmensregister). Any wilful or careless violation of the provisions regarding the transparency register may be punished with considerable fines.

Access to the transparency register is only granted to certain public authorities as well as to anyone who needs the information contained therein to fulfil general duties of care under the Anti-Money Laundering Act or evidences a legitimate interest. 

Any notifications to the transparency register initially required must be made by 1 October 2017. The register will be accessible as from 27 December 2017.

Apart therefrom, the draft act provides for additional details to be shown shareholders lists of limited liability companies (GmbH). Besides the nominal value of each share the shareholders list must in the future specify the percentage in the share capital conveyed by such share; moreover, if a shareholder owns more than one share the aggregate percentage in the share capital held by such shareholder must be set out. Furthermore, if shares are held by a partnership which is not registered in the commercial register (in particular a civil law partnership) such partnership’s partners have to be named individually and under a joint designation (typically the name of the partnership). The new requirements will apply to shareholder lists submitted to the commercial register as from the date on which the new legislation takes effect. 

The act will take effect on 26 July 2017, the date by which the Fourth EU Anti-Money Laundering Directive has to be implemented by the member states. The first reading of the act in the German parliament (Bundestag) is scheduled for 23 March 2017.

Please click here for the press release of the federal ministry of finance regarding the governmental draft act (in German) and here for the German text of the draft act itself. If you are interested in further information, please do not hesitate to contact Christine Oppenhoff.