Previously on 22 November 2022, the European Court of Justice partially invalidated the fifth European Directive on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing. As a result, the UBO (Ultimate Benificial Owner) register was immediately closed to third parties. According to the court, it was necessary to fall back on the fourth European anti-money laundering directive. On 17 February, the Standing Committee on Finance submitted a number of questions and comments regarding the analysis and follow-up of the ruling to Sigrid Kaag, the Minister of Finance. The Minister subsequently answered these questions by letter on 19 April, the most important of which we will briefly discuss below.
Emergency Act
The minister writes that the Court's ruling implies that stricter requirements should be imposed on access to information from the UBO register. Think of verification of right to access the register and then also preventing UBO information from reaching third parties who lack this right to access. The government expects to submit an emergency bill around the summer that will make these protective measures a reality.
Legitimate interest
According to the fourth anti-money laundering directive, three groups have access to the UBO register: competent authorities and Financial Intelligence Units, institutions subject to reporting obligations and individuals and organizations that can demonstrate a legitimate interest. The minister informs in her letter that the government is currently investigating what the interpretation of legitimate interest will look like. It has yet to be decided how and by whom the presence or absence of a legitimate interest will be assessed. In any case, the intention is that access will only be granted in the context of activities involving the prevention and combating of money laundering and terrorist financing, or related predicate offences.
The party requesting access to the UBO register will therefore have to demonstrate this. In all cases, there must be a purpose tie to the objectives set out in the Anti-Money Laundering Directive. Frameworks to assess this are being drafted by the government.
Extract of own data
The minister also writes that the cabinet is exploring a possibility of extracting proprietary data. A legal entity could then use an UBO extract on a voluntary basis in business transactions. Through this route, access to the UBO register for the party entering into the transaction would no longer be necessary.
Quick restoration of access
A final noteworthy response from the Minister is to the question of how the government views possible unfair competition when larger banks have easy access to the UBO register but smaller banks do not. To this, the Minister replies that the intention is for all banks to regain access to the UBO register as soon as possible, but that the method of affiliation may affect its expediency. The size of the bank is not decisive in this respect.