Tag: money laundering

The new rules of prevention of money laundering: a challenge for professionals

May 7, 2020

Juan Núñez

The Directive 2015/849 of the European Union to prevent money laundering means a series of new obligations to prevent money laundering, imposed on professionals.

All professionals are (or should be) aware of that, training and organizing our work to fulfill these obligations. But I think it is important, as well, that customers also understand our information requirements and collaborate, since it is a task that is imposed to us.

The Directive 2015/849 of the European Union to prevent money laundering, which shall be transposed to all EU Estates, represents a considerable increase in the obligations of the professionals with regard to the identification and monitoring of operations in which these professionals intervene, at any extent.
These new obligations involve maintaining a vigilant attitude regarding the knowledge of customers and their operations. This supposes a considerable overload, uncomfortable for both the professional and the client, who is focused on providing data on their economic sphere. This function, which banks are already deploying very incisively, is sometimes exaggeratedly extended to any professional, doubling or tripling the control already carried out in other instances, through which it has been previously passed.

In this matter, as it is so many others, Administrations transfer their responsibility to the individuals, multiplying, in addition, the possible liable subjects, in case of slippage. The Directive requires us, then, a series of obligations that we summarize below, because we understand that it is important that the individuals required for information know that it is not an extreme zeal, but an imposed obligation:
The Directive obliges us to formally identify our clients. This means that, if the client is a natural person, we must ask them for their TIN (N.I.F) if they are a Spanish national, or their passport or identity card issued by the authorities of the country of origin (foreigners from EU/EEA Member States), or their passport, residence card or foreigner’s identity card in the case of foreigners from non-EU or non-EEA countries. If our client is a legal person, we must identify it by means of registry reports and a documentary review of the identity of anyone acting on behalf of said legal person and all those participating therein.

The Directive obliges us to identify the beneficial owner of the business or transaction, as well as to take measures to verify said identity. In other words, we have to identify the person on whose behalf our clients are acting prior to accepting the professional assignment, with the signing a sworn statement by the client or the natural person with a power of attorney to represent the legal person.

The Directive obliges us to acquaint ourselves with the purpose and intended nature of the business relationship. In other words, we need to have specific knowledge of our client’s professional and/or business activities, which must be checked by reviewing any supporting documentation it has provided, or by obtaining information from reliable independent sources.
The Directive obliges us to perform ongoing monitoring of our business relationship with our clients. This entails retaining the data we hold updated to ensure they are in line with current realities, despite the passage of time. All information is therefore kept up to date.

The publicity of the beneficial owner of the companies will be accentuated soon

January 25, 2019

Juan Núñez

The Fifth Directive of the European Union for the Prevention of Money Laundering and the Financing of Terrorism, of 30 May 2018, echoes the great concern over the recent attacks suffered (Paris, Nice, Berlin, Brussels, London, Barcelona and Cambrils), and is determined to toughen the surveillance measures, and one of them is to improve “the transparency of the companies and other legal entities, trusts (” trust “) and similar instruments”.

For this purpose, it establishes that Public Registries must have “sufficient, accurate and current” information on the beneficial ownership of the companies and allow public access to this information. It is reminded that the beneficial owner is “the individual or individuals who ultimately own or control, directly or indirectly, a percentage greater than 25% of the capital or voting rights of a legal entity or that, through agreements or statutory provisions, exercise a direct or indirect control of a corporation”. If the beneficial owner is also a corporation, the beneficial owner of this corporation shall be consigned, and the chain will continue upwards until reaching the beneficial owners who hold control in more than 25%.
The Directive emphasizes the need for the “legally bound subjects” (the companies themselves -by means of their directors-, financial entities, public registries, notaries, lawyers that provide corporate or real estate advice, real estate agents, among others) to collect and safeguard these data, maintaining them in a “sufficient, accurate and current” way.
For years, this information has already been gathered by companies, affected professionals, financial institutions and notaries.

The novelty lies in the public access to the information contained in the registers, which the Directive concludes that “it allows for greater control of information by civil society, including the press or civil society organizations” since ” The confidence of investors and the public in financial markets depends to a large extent on the existence of a rigorous disclosure regime that provides transparency regarding real ownership and the control structures of companies “.
It is also a novelty that, if there is no real ownership, because the capital is in hand of partners with smaller shareholdings, the data of the directors of the final company will be consigned.

The scope of this publicity remains to be seen, and its collateral effects can be disconcerting (all the citizens to know who is the owner of half of the city, it is a collateral effect that does not have much to do with the fight against terrorism…).
We must remember, however, the misgivings that caused the first company Directives, back in the 70s, which forced to deposit the annual accounts of the companies in the Commercial Registry.

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