LEGAL PERSONS
Obligation to disclose ownership structures and beneficial owners. Legal person and arrangements without legal personality incorporated within the territory of EU Member States are obliged to obtain and hold adequate, accurate and current information on their beneficial ownership, including the details of the beneficial interests held, to provide, in addition to information about their legal owner, information on the beneficial owner and to communicate that information to a central register in each Member State, for example a commercial register, companies register or a public register.
How does CERTIFIX help disclosure? CERTIFIX allows via the CERTIFIX Software any legal person which follows its „step-by-step“ approach to perform the disclosure of ownership and control structure up to the beneficial owner(s)) (beneficial ownership (interest)) in a way that this information is adequate, accurate and current as required by the EU AML Directive.
Where is the disclosure obligation laid down? Art. 30 (1), (2), (4) of the EU AML Directive 849/2015, as amended.
Detailed legal analysis can be consulted HERE.
AUTHORITIES KEEPING BENEFICIAL OWNERSHIP REGISTRIES
Obligation to verify the disclosure of ownership structures and beneficial owners. The EU AML Directive requires authorities keeping the beneficial ownership registries ensure that the information held in those central registers of beneficial owner is adequate, accurate and current, and that they put in place mechanisms to this effect as well as mechanism to uncover, report, earmark and resolve discrepancies between the registered and existing information.
How does CERTIFIX Software help disclosure? CERTIFIX allows any legal person which follows its „step-by-step“ approach in the CERTIFIX Software to perform the disclosure of ownership and control structure (beneficial ownership (interest)) up to the beneficial owner(s)) in a way that information thereof is adequate, accurate and current as required by the EU AML Directive. Thus, if authorities keeping the register of beneficial owners required or recommended to legal person to register therein and have the TransparencyID and CertifixID, they could be sure that the information on the ownership and control structure is adequate, accurate and current and that also these authorities fulfilled their obligation under the AML Directive; in case of need, the relevant authority can always – in the CERTIFIX Database via entering the TransparencyID or CertifixID of the legal person – check and verify on its own that the information about corporate and ownership structure of the legal person and its beneficial owner(s) is indeed adequate, accurate, current and correctly documented.
How does CERTIFIX Database help verify disclosure? Alternatively, even if the authorities keeping the beneficial ownership registers did not require or recommend upfront to legal persons to register the ownership and control structure up to the beneficial owner via CERTIFIX Database and to obtain the TransparencyID and CertifixID, the authorities keeping the beneficial ownership registries can always use the CERTIFIX Database as a verification source: there they can look up information and constitutive documents proving the legal accuracy of the disclosed of ownership and control structure up to the beneficial owner(s)) (beneficial ownership (interest)). Also these authorities cross-check the information communicated by legal persons to the central beneficial ownership register against the evidenced and certified information in the CERTIFIX Database, if the legal person in question is registered therein.
Where is the disclosure obligation laid down? Art. 30 (4) of the EU AML Directive 849/2015, as amended.
Detailed legal analysis can be consulted HERE.
BANKS AND FINANCIAL INSTITUTIONS
Obligation to verify the disclosure of ownership structures and beneficial owners. The EU AML Directive requires banks and financial institutions as obliged entities, first, to identify the beneficial owner and taking reasonable measures to verify that person’s identity so that the obliged entity is satisfied that it knows who the beneficial owner is, including, as regards legal persons, trusts, companies, foundations and similar legal arrangements, as well as taking reasonable measures to understand the ownership and control structure of the customer, and second to conduct an ongoing monitoring of the business relationship.
How does CERTIFIX Software help disclosure? CERTIFIX allows any legal person which follows its „step-by-step“ approach in the CERTIFIX Software to perform the disclosure of ownership and control structure up to the beneficial owner(s)) in a way that information thereof is adequate, accurate and current as required by the EU AML Directive. Thus, if bank or other financial institution required or recommended to its customers to register therein and have the TransparencyID and CertifixID, they could be sure that the information on the ownership and control structure is adequate, accurate and current and that also these authorities fulfilled their obligation under Art. 13 (1) (b), (d) of the AML Directive; in case of need, the bank or other financial institution can always – in the CERTIFIX Database via entering the TransparencyID or CertifixID of the legal person – check and verify on its own and towards its public surveillance authority that the information about corporate and ownership structure of its customer and its beneficial owner(s) is indeed adequate, accurate, current and correctly documented.
How does CERTIFIX Database help verify disclosure? Alternatively, even if the bank or other financial institution did not require or recommend upfront to its customers to register the ownership and control structure up to the beneficial owner via CERTIFIX Database and to obtain the TransparencyID and CertifixID, such bank or other financial institution can always use the CERTIFIX Database as a verification source: there they can look up information and constitutive documents proving the legal accuracy of the disclosed of ownership and control structure up to the beneficial owner(s)). Also, bank or other financial institution can cross-check the information communicated by the customers to such bank or other financial institution against the evidenced and certified information in the CERTIFIX Database, if the customer in question is registered therein.
Where is the disclosure obligation laid down? Art. 2 (1) subp. 1 and 2, Art.13 (1) (b), (d) of the EU AML Directive 849/2015 (as amended).
Detailed legal analysis can be consulted HERE.
AUDITORS, EXTERNAL ACCOUNTANTS, TAX ADVISORS, NOTARIES, LAWYERS AND CERTAIN LEGAL PROFESSIONALS
Obligation to verify the disclosure of ownership structures and beneficial owners. The EU AML Directive requires other obliged entities, such as auditors, external accountants, tax advisors notaries and certain other independent legal professionals to identify the beneficial owner and taking reasonable measures to verify that person’s identity so that the obliged entity is satisfied that it knows who the beneficial owner is, including, as regards legal persons, trusts, companies, foundations and similar legal arrangements, taking reasonable measures to understand the ownership and control structure of the customer, conduct an ongoing monitoring of the business relationship.
How does CERTIFIX Software help disclosure? CERTIFIX allows any legal person which follows its „step-by-step“ approach in the CERTIFIX Software to perform the disclosure of ownership and control structure (beneficial ownership (interest)) up to the beneficial owner(s)) in a way that information thereof is adequate, accurate and current as required by the EU AML Directive. Thus, if obliged entities required or recommended to its customers to register therein and have the TransparencyID and CertifixID, they could be sure that the information on the ownership and control structure is adequate, accurate and current and that also these authorities fulfilled their obligation under Art. 13 (1) (b), (d) of the AML Directive; in case of need, the obliged entity can always – in the CERTIFIX Database via entering the TransparencyID or CertifixID of the legal person – check and verify on its own and towards its public surveillance authority that the information about corporate and ownership structure of its customer and its beneficial owner(s) is indeed adequate, accurate, current and correctly documented.
How does CERTIFIX Database help verify disclosure? Alternatively, even if the other obliged entity did not require or recommend upfront to its customers to register the ownership and control structure up to the beneficial owner via CERTIFIX Database and to obtain the TransparencyID and CertifixID, such other obliged entities can always use the CERTIFIX Database as a verification source: there they can look up information and constitutive documents proving the legal accuracy of the disclosed of ownership and control structure up to the beneficial owner(s)). Also, these other obliged entities can cross-check the information communicated by the customers to such other obliged against the evidenced and certified information in the CERTIFIX Database, if the customer in question is registered therein.
Where is the disclosure obligation laid down? Art. 2 (1) subp. 3, Art.13 (1) (b), (d) of the EU AML Directive 849/2015 (as amended).
Detailed legal analysis can be consulted HERE.
PUBLIC CONTRACTORS
Obligation to verify the disclosure of ownership structures and beneficial owners. The EU Public Procurement Directive 2014/24 requires in its Art. 57 (1) that contracting authorities (public bodies in EU Member States) exclude from a participation in procurement procedures economic operators bidding for public contracts if they are concerned in a qualified manner by an exclusion ground listed in that Article or another reason, such as conflict of interest, or if such exclusion ground concerns a person who has decision or control power over such economic operator that is any person in the ownership and control structure up to the beneficial owner(s) of the bidding economic operator.
How does CERTIFIX Software help disclosure? CERTIFIX allows any legal person which follows its „step-by-step“ approach in the CERTIFIX Software to perform the disclosure of ownership and control structure (persons with powers of decision and control over the bidder) up to the beneficial owner(s)) in a way that information thereof is adequate, accurate and current. Thus, if public contractors required or recommended to the bidders to register therein and have the TransparencyID and CertifixID, they could be sure that the information on the ownership and control structure is adequate, accurate and current and that also these authorities fulfilled their obligation under Art. 57 (1) of the Public Procurement Directive; in case of need, the public contractor can always – in the CERTIFIX Database via entering the TransparencyID or CertifixID of the legal person – check and verify on its own and towards its public surveillance authority and auditors that the information about corporate and ownership structure of the bidder and its beneficial owner(s) is indeed adequate, accurate, current and correctly documented.
How does CERTIFIX Database help verify disclosure? Alternatively, even if the public contractor did not require or recommend upfront to the bidders to register the ownership and control structure up to the beneficial owner via CERTIFIX Database and to obtain the TransparencyID and CertifixID, such public contractor can always use the CERTIFIX Database as a verification source: there they can look up information and constitutive documents proving the legal accuracy of the disclosed of ownership and control structure up to the beneficial owner(s)) (persons with powers of decision and control over the bidder). Also public contractors can cross-check the information communicated by the bidders to such public contractor against the evidenced and certified information in the CERTIFIX Database, if the bidder in question is registered therein.
Where is the disclosure obligation laid down? Art. 57 (1) of the EU Public Procurement Directive (EU) 2014/24
Detailed legal analysis can be consulted HERE.
EU FUNDS PROVIDERS
Obligation to verify the disclosure of ownership structures and beneficial owners. Financial (EU budget) Regulation that the responsible authorising officer excludes from a participation in a grant competition economic operators bidding for money from the EU budget (potential recipient entity) if they are concerned in a qualified manner by an exclusion ground listed in that Article or if such exclusion ground concerns a person that has decision or control of such potential recipient entity, including persons and entities within the ownership and control structure and beneficial owners, and appropriate evidence that none of those persons are in one of the exclusion situations. The Financial Regulation, in addition, obliges authorising officers to check the persons and entities in the ownership and control structures of (potential) recipient entities and their beneficial owners from national databases accessible free of charge.
How does CERTIFIX Software help disclosure? CERTIFIX allows any legal person which follows its „step-by-step“ approach in the CERTIFIX Software to perform the disclosure of ownership and control structure (persons with powers of decision and control over the potential recipient) up to the beneficial owner(s)) in a way that information thereof is adequate, accurate and current. Thus, if EU fund provider required or recommended to the potential recipients to register therein and have the TransparencyID and CertifixID, they could be sure that the information on the ownership and control structure is adequate, accurate and current and that also these authorities fulfilled their obligation under Art. 137 (2) (b) of Financial (EU budget) Regulation (EU) 2018/1046; in case of need, the EU fund provider can always – in the CERTIFIX Database via entering the TransparencyID or CertifixID of the legal person – check and verify on its own and towards its public surveillance authority and auditors that the information about corporate and ownership structure of the bidder and its beneficial owner(s) is indeed adequate, accurate, current and correctly documented.
How does CERTIFIX Database help verify disclosure? Alternatively, even if the EU fund provider did not require or recommend upfront to the potential recipients to register the ownership and control structure up to the beneficial owner via CERTIFIX Database and to obtain the TransparencyID and CertifixID, such EU funds provider can always use the CERTIFIX Database as a verification source: in this source they can look up information and constitutive documents proving the legal accuracy of the disclosed of ownership and control structure up to the beneficial owner(s)) (persons with powers of decision and control over the potential recipient, including persons and entities within ownership and control structure of the potential recipient and its beneficial owner(s)). Also the EU funds provider can cross-check the information about its ownership and control structure up to the beneficial owner(s) communicated by the potential recipient against the evidenced and certified information about such structure and owner in the CERTIFIX Database, if the potential recipient in question is registered therein.
Where is the disclosure obligation laid down? Art. 136 (1), (4) and Art. 137 (2) (b) and (4) (a) of Financial (EU budget) Regulation (EU) 2018/1046
Detailed legal analysis can be consulted HERE.
AUDITORS OF THE EUROPEAN COMMISSION (AT THE NATIONAL AND EU LEVEL)
Obligation to verify the disclosure of ownership structures and beneficial owners. The European Commission, as the institution primary responsible for the protection of the EU budget, is obliged to verify via its auditors whether Member States managing bodies and organisations under their responsibility in Member States distribute the funds from the EU budget in accordance with the EU and Member States‘ national rules on fair and transparent management of public money, such as the rules of Financial (EU budget) Regulation (EU) 2018/1046 and the EU Public Procurement Directive and the national transposition laws etc. Amongst others, the European Commission is obliged to verify through its auditors whether managing bodies and organisations under their responsibility in Member States check the information and evidence on persons and entities within ownership and control structures of recipients of funds from the EU budget and their beneficial owners and whether such recipients suffer the relevant consequences if they or the persons or entities in the ownership and control structure or beneficial owners are affected, for example, by any of the exclusion grounds or by conflict of interest or if they comply with the status of a small and medium enterprise, if they received a subsidy destined for small and medium enterprises.
How does CERTIFIX Software help disclosure? If before performing the audits, providers of EU funds in Member States requested or required recipients of EU funds to register via the CERTIFIX Software their ownership and control structure and beneficial owner(s) and obtain TransparencyID and CertifixID, the auditors of the European Commission could easily see a complete the ownership and control structure of recipients of EU funds and their beneficial owner(s) in the CERTIFIX Database.
How does CERTIFIX Database help verify disclosure? Alternatively, when performing the audits the auditors can check in the CERTIFIX Database whether by chance the ownership and control structure of the audited recipient of EU funds and its beneficial owner is not registered therein.
Where is the disclosure obligation laid down? Art. 61, 136 (1), (4) and Art. 137 (2) (b) and (4) (a) of Financial (EU budget) Regulation (EU) 2018/1046, Art. 57 (1) of the EU Public Procurement Directive (EU) 2014/24, Recommendation 2003/361/EC concerning the definition of micro, small and medium-sized enterprises
Detailed legal analysis can be consulted HERE.
EUROPEAN COURT OF AUDITORS
Obligation to verify the disclosure of ownership structures and beneficial owners. The European Court of Auditors, as the body ultimate responsible for the protection of the EU budget spent by the European Commission, is obliged to verify via its auditors whether the authorising officers of the European Commission distribute the funds from the EU budget in accordance with the Financial (EU budget) Regulation (EU) 2018/1046. Amongst others, the European Court of Auditors is obliged to verify through its auditors whether the information and evidence on persons and entities within ownership and control structures of recipients of funds from the European Commission are correctly established and whether such recipients suffer the relevant consequences if they or the persons or entities or beneficial owners are affected, for example, by any of the exclusion grounds or by conflict of interest.
How does CERTIFIX Software help disclosure? If before performing the audits, the European Commission requested or required its contractors which receive funds from the European Commission to register their ownership and control structure and beneficial owners via the CERTIFIX Software into the CERTIFIX Database, the auditors of the European Court of Auditors could have a complete and evidenced profile of such ownership and control structure and beneficial owner(s) of the contractor to which the European Commission made payments in return of goods or services which it provided to the European Commission.
How does CERTIFIX Database help verify disclosure? Alternatively, when performing the audits the auditors of the European Court of Auditors can check in the CERTIFIX Database whether by chance the ownership and control structure and the beneficial owner of the contractor to which the Commission made payments is not registered therein.
Where is the disclosure obligation laid down? Art. 136 (1), (4) and Art. 137 (2) (b) and (4) (a) of Financial (EU budget) Regulation (EU) 2018/1046
Detailed legal analysis can be consulted HERE.
EUROPEAN COMMISSION AND FOREIGN INVESTMENT CONTROL BODIES OF EU MEMBER STATES
Obligation to verify the disclosure of ownership structures and beneficial owners. Member States may maintain, amend or adopt mechanisms to screen foreign direct investments in their territory on the grounds of security or public order. Member States that have a screening mechanism in place should provide for the necessary measures, in compliance with Union law, to prevent circumvention of their screening mechanisms and screening decisions. This should cover investments from within the Union by means of artificial arrangements that do not reflect economic reality and circumvent the screening mechanisms and screening decisions, where the investor is ultimately owned or controlled by a natural person or an undertaking of a third country. Both screened and certain non screened foreign investments shall be notified to the European Commission which issues opinion on them.
How does CERTIFIX Software help disclosure? If before screening the foreign investment EU Member States requested the natural or legal person making the investment structure reaching into the EU, which would be normally composed of a subsidiary or collateral structure of a non-EU legal person, to register via the CERTIFIX Software into the CERTFIX Database, they together with the European Commission could have a complete and evidenced profile of the whole foreign investment structure which could serve as a common basis for the European Commission issuing an opinion on those foreign investment.
How does CERTIFIX Database help verify disclosure? After the screening, if the registration via CERTIFIX Software was not required or recommended upfront to the foreign investor and its corporate structure, the European Commission and other Member States can check in the CERTIFIX Database if any of the legal persons or arrangements without legal personality, which form part of the notified foreign investment structure by other Member State, are by chance not contained therein.
Where is the disclosure obligation laid down? Art. 3 (1), (6) of Regulation (EU) 2019/452 establishing a framework for the screening of foreign direct investments into the Union
Detailed legal analysis can be consulted HERE.
EUROPEAN COMMISSION AND FINANCIAL INTELLIGENCE UNITS OF EU MEMBER STATES
Obligation to verify the disclosure of ownership structures and beneficial owners. In case of doubt about the accuracy of information ownership and control structure and beneficial owners of legal persons communicated to the beneficial ownership registry or to banks, financial institutions and other obliged entities, Financial intelligence units of EU Member States shall take steps to verify the ownership and control structure and beneficial owners of the legal person in question. At the same time, the FIUs, obliged entities under EU AML Directive, providers of public contracts and subsidies from the EU budget or EU Member States budgets are obliged, in addition to their other duties, to enforce the requirements of Regulation (EU) 2001/2580 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism in conjunction with specific Regulations imposing economic sanctions. These obligations entail for relevant subjects of private law, public law bodies, FIUs of Member States and the European Commission to check whether among the persons with ownership or control over the customers of obliged entities or over public contracts, funds or subsidies recipients, including their beneficial owners, there is no natural or legal person, including a state or state-like organizations, listed on the published EU sanctions list.
How does CERTIFIX Software help disclosure? CERTIFIX allows any legal person which follows its „step-by-step“ approach in the CERTIFIX Software to perform the disclosure of ownership and control structure in a way that information thereof is adequate, accurate and current. Thus, if the competent FIU required to legal persons – in respect of which it has doubt whether their information in the beneficial owners register or with the obliged entities is correct – to register through the CERTIFIX Software and have the TransparencyID and CertifixID before starting verification procedure of their own, they could make the verification considerably easier for them; if they ordered the suspect legal person to register, through CERTIFIX Software, such legal person would do the identification of the ownership and control structure and beneficial owner for them and the FIU could only require from such legal person to provide it with paper originals of evidencing documents if necessary.
How does CERTIFIX Database help verify disclosure? Alternatively, even if the FIU in question did not require upfront from the legal person – in respect of which it has doubt whether their information in the beneficial owners register or with the obliged entities is correct – to register the ownership and control structure up to the beneficial owner via CERTIFIX Software and to obtain the TransparencyID and CertifixID, such FIU would always be able to use the CERTIFIX Database as a verification source: in this source they can look up information and constitutive documents proving the legal accuracy of the disclosed of ownership and control structure up to the beneficial owner(s)) and cross-check there the information communicated by such legal person to beneficial owner register against the evidenced and certified information in the CERTIFIX Database, if the legal person in question is registered in the latter.
Where is the disclosure obligation laid down? EU AML Directive, Art. 1 (5) and (6), Arts. 2 and 3 of Regulation (EU) 2001/2580 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism, Guidelines on implementation and evaluation of restrictive measures (sanctions) in the framework of the EU Common Foreign and Security Policy, Dated 8 December 2003 (15579/0), as amended by doc. 9068/13 dated 30 April 2013 in relation to the notion of ownership and control (subheading “Compliance”, p. I to V after para 55)
Detailed legal analysis can be consulted HERE.
EUROPEAN COMMISSION AS THE TOP EU COMPETITION AUTHORITY
Obligation to verify the disclosure of ownership structures. The European Commission as the supreme authority responsible for enforcing EU competition rules is obliged, among others, assess rules on mergers (concentrations). A necessary preliminary step to assess compliance of the merger with the objectives of the EU Merger Regulation and its compatibility with the common market is to check whether certain competitor has a control over another competitor by way of owning or controlling share interest in such a competitor so as to form a single economic unit. When finding out whether a certain competitor has a control over another subject in the framework of assessment of a single economic unit, the European Commission as the competition authority has to undertake the analysis of the ownership and control structure of the competitors in question.
How does CERTIFIX Software help disclosure? CERTIFIX via the CERTIFIX Softwarecan significantly help both the competition department of the European Commission and persons notifying mergers to shorten and streamline the merger assessment process. If the European Commission required or recommended to applicants for licences to have their ownership and control structures up to the beneficial owner registered via the CERTIFIX Software and obtain TransparencyID and CertifixID before notifying the merger, the European Commission could have immediately an overview of the full ownership and control structure up to the beneficial owner(s) of the parties to the merger. Within the merger assessment procedure the European Commission could only require from the notifiying parties to provide it with paper originals of evidencing documents if necessary. Thus, the use of CERTIFIX Software could considerably shorten the merger assessment procedure for the benefit of all parties to such a procedure.
How does CERTIFIX Database help verify disclosure? Even if the European Commission did not require or recommend upfront to the parties notifying the merger to register their ownership and control structure up to the beneficial owner via CERTIFIX Database and to obtain the TransparencyID and CertifixID, the European Commission can always use the CERTIFIX Database as a verification source: in this source it can look up information and constitutive documents proving the legal accuracy of the disclosed of ownership and control structure up to the beneficial owner(s)) of the parties to the merger. Also the European Commission can cross-check the information about the ownership and control structure up to the beneficial owner(s) communicated by the parties to the merger against the evidenced and certified information about such structure and owner in the CERTIFIX Database, if any of the parties to the merger in question is registered therein.
Where is the disclosure obligation laid down? Regulation (EC) No 139/2004, as amended.
Detailed legal analysis can be consulted HERE.
CENTRAL BANKS AND LICENSING AUTHORITIES FOR THE FINANCIAL SECTOR
Obligation to verify the disclosure of ownership structures and beneficial owners. Central banks and similar authorities responsible for regulation of the financial sector are authorised to issue licences to a number of financial institutions, insurance and reinsurance companies, investment funds, securities brokers etc. A transparent ownership and control structure up to the beneficial owner, including an absence of non-credible person from a financial perspective among the persons and entities within the ownership and control structure and the beneficial owner(s), is one of the standard requirements conditioning the delivery of such a licence under the laws of Member States regulating different sectors of banking and financial services. Verification of that transparency is, in turn, a normal part of the licensing process. Since ownership and control structure up to the beneficial owners can be very complex the verification of their transparency within the licensing procedure of financial institutions can be lengthy and cumbersome.
How does CERTIFIX Software help disclosure? CERTIFIX via the CERTIFIX Softwarecan significantly help both the central banks or similar authorities issuing licences for services in the financial sector as well as applicants for such licences to shorten and streamline such licencing procedure. If central banks or similar licensing authorities for the financial sector required or recommended to applicants for licences to have their ownership and control structures up to the beneficial owner registered via the CERTIFIX Software and obtain TransparencyID and CertifixID before lodging application for the desired licence, the central bank or other licensing authority could have immediately an overview of the full ownership and control structure up to the beneficial owner(s) of the applicant. Within the licensing procedure it could only require from the applicant to provide it with paper originals of evidencing documents if necessary.
How does CERTIFIX Database help verify disclosure? Even if the central bank or a similar authority issuing licences for services in the financial sector did not require or recommend upfront to the applicants to register the ownership and control structure up to the beneficial owner via CERTIFIX Database and to obtain the TransparencyID and CertifixID, such a central bank or similar authority issuing licences in for services the financial sector can always use the CERTIFIX Database as a verification source: in this source it can look up information and constitutive documents proving the legal accuracy of the disclosed ownership and control structure up to the beneficial owner(s)). Also the central bank or a similar authority issuing licences for services in the financial sector can cross-check the information about its ownership and control structure up to the beneficial owner(s) communicated by the applicant against the evidenced and certified information about such structure and owner in the CERTIFIX Database, if the applicant in question is registered therein.
Where is the disclosure obligation laid down? Laws of Member States regulating different sectors of banking and financial services
Detailed legal analysis can be consulted HERE.
LICENSING AUTHORITIES IN NON-FINANCIAL SECTORS IN EU MEMBER STATES
Obligation to verify the disclosure of ownership structures and beneficial owners. A number of authorities in Member States competent for different sectors of regulated business activities, such as gambling, TV and radio broadcasting, activities relating to national security, are authorised to issue licences if a transparent ownership and control structure up to the beneficial owner is evidenced. Verification of that transparency is, in turn, a normal part of the licensing process. Since ownership and control structure up to the beneficial owners can be very complex the verification of their transparency within the licensing procedure in the aforementioned non-financial sectors can be administratively time consuming and cumbersome.
How does CERTIFIX Software help disclosure? CERTIFIX via the CERTIFIX Softwarecan significantly help both the licencing authorities and applicants for such licences to shorten and streamline the licencing procedure. If licencing authorities required or recommended to applicants for licences to have their ownership and control structures up to the beneficial owner registered via the CERTIFIX Software and obtain TransparencyID and CertifixID before lodging application for the desired licence, the licencing authority could have immediately an overview of the full ownership and control structure up to the beneficial owner(s) of the applicant. Within the licensing procedure, it could only require from the applicant to provide it with paper originals of evidencing documents if necessary.
How does CERTIFIX Database help verify disclosure? Even if the licencing authority did not require or recommend upfront to the applicants to register the ownership and control structure up to the beneficial owner via CERTIFIX Database and to obtain the TransparencyID and CertifixID, such an authority can always use the CERTIFIX Database as a verification source: in this source it can look up information and constitutive documents proving the legal accuracy of the disclosed ownership and control structure up to the beneficial owner(s)). Also the licencing authority can cross-check the information about its ownership and control structure up to the beneficial owner(s) communicated by the applicant against the evidenced and certified information about such structure and owner in the CERTIFIX Database, if the applicant in question is registered therein.
Where is the disclosure obligation laid down? Laws of Member States regulating different non-financial sectors, such as gambling, TV and radio broadcasting, activities relating to national security
Detailed legal analysis can be consulted HERE.
TAX AUTHORITIES (EU COOPERATION)
Obligation to verify the disclosure of ownership structures. Tax authorities have to deal with the issue of disclosure of ownership and control structures of legal persons and their beneficial owners in particular when pursuing tax offences consisting in tax avoidance of income tax and/or tax on profit of legal persons via intragroup transactions within multinational groups of companies spreading to several tax jurisdictions. Without the disclosure of the ownership and control structure up to the beneficial owner(s), incuding subsidiary (daughter) and collateral (sister) structures, it is not possible to establish and evidence that a circumvention, fraud or abuse of tax laws imposing payment of corporate income or profit tax and reveal steps aimed at artifical inflation of tax losses of legal persons within a group of companies.
How does CERTIFIX Software help disclosure? CERTIFIX thanks to the obligatory registration of the parent structure (ownership and control structure) of a legal person which wants to obtain TransparencyID and CertifixID as well as the possibility of registration of the subsidiary (daughter) and collateral (sister) structure of such legal person through CERTIFIX Software, enables tax authorities to make a clear picture of ownership structures of legal persons and groups of legal persons; this represents the first step in determining whether a tax avoidance scheme is present and whether or not transfer pricing rules within a group may be breached. If a legal person registered in the CERTIFIX Database via CERTIFIX Software also added individiual or consolidated annual financial statements which relate to this legal person and entities in the corporate structure of which it is a part, the CERTIFIX Database can in relation to such a legal person provide to the competent tax authorities a preliminary picture showing whether such a legal person could not practice corporate tax avoidance offences.
Where is the disclosure obligation laid down? Member StatesTax Codes (covering direct income tax of legal persons), CJEU in cases Halifax, C-255/02, Cadburry Schweppes, C-196/04, Thin Cap Koup, C-524/04, 3M Italia, C-417/10; OECD, Report on Disclosure Initiatives – Tackling Aggressive Tax Planning Through Improved Transparency and Disclosure (2011)
Detailed legal analysis can be consulted HERE.
CRIMINAL LAW ENFORCEMENT BODIES (EU COOPERATION)
Obligation to verify beneficial owners. The criminal law enforcement bodies have the obligation to prosecute perpetrators of criminal acts, including legal persons and their beneficial owners who, via controlling beneficial ownership interest, can incite or control (criminal) behaviour of such legal persons in which they have such interest. Within the EU, the criminal law enforcement bodies also have to ensure freezing of assets, including beneficial ownership interests, and evidence, including evidence of beneficial ownership interest, in their territory on behalf of criminal law enforcement bodies of other Member States.
How does CERTIFIX help disclosure? A criminal law enforcement body can check the CERTIFIX Database to see whether it can find there either the information and/or evidence as to who is a beneficial owner of legal persons which it is prosecuting or which it intends to prosecute or vice-versa whether a natural person in question does not have a direct or indirect controlling beneficial ownership interest in one or more legal persons. Moreover, via the Sandbox, criminal law enforcement bodies can find which type of evidence they will have to obtain in order to be able to prove beyond reasonable doubt that the discovered beneficial owner is indeed a beneficial owner with decisive influence over a legal person – exercised through a controlling beneficial ownership interest – which is being prosecuted for commitment of one or more criminal acts.
Where is the disclosure obligation laid down? In criminal codes of EU Member States (obligation to prosecute perpetrators of criminal acts), sector specific international treaties and conventions and EU regulations and framework decisions (criminal liability of legal persons), Art. 2 (c) and (d) and Art. 3 (1) of the Council Framework Decision 2003/577/JHA on the execution in the European Union of orders freezing property or evidence (obligation to cooperate and ensure evidence and assest freezing on behalf of criminal law enforcement authorities in other Member States)
Detailed legal analysis can be consulted HERE.