This article was first published here by First Advisory Group, Liechtenstein
The 5th EU Anti-Money Laundering Directive sets out extended obligations in terms of content and transparency of registers of beneficial owners through a modification of Articles 30 and 31. In addition, within the framework of implementation of the Act currently in force, weak points have been identified which are being remedied through adjustment to the law.
On 1 April 2021, the new Act establishing a Register of Economic Beneficiaries of Legal Entities (Gesetz über das Verzeichnis der wirtschaftlich berechtigten Personen von Rechtsträgern, VwbPG) enters into force. It replaces the Act establishing a Register of Beneficial Owners of Domestic Legal Entities (VwEG) of 6 December 2018, which has been in force since 1 August 2019. As a result, the corresponding terms of the 5th EU Anti-Money Laundering Directive will be implemented.
The 5th EU Anti-Money Laundering Directive does not make a distinction between the terms 'economic beneficiary' and 'beneficial owner'. For this reason, the differing definitions applying in Liechtenstein of 'economic beneficiary' according to legislation on due diligence and 'beneficial owner' under the Act establishing a Register of Beneficial Owners of Domestic Legal Entities are being removed. Based on this standardization of terms, the terminology in the title of the Act is being modified.
The practical effects are as follows:
Duties of legal entities
- Both with corporations, including establishments or trust enterprises with corporate structures, as well as companies without personality and foundations, trusts and establishments or trust enterprises with structures similar to foundations, the legal entities must establish the identity of the economic beneficiaries and notify the same electronically to the Office of Justice (Amt für Justiz, AJU).
- If an existing entry in a corresponding register of another EEA Member State can be evidenced, then for trusts and similar legal agreements, there exists no obligation to enter the economic beneficiaries thereof in the register. This exception shall only apply if the trust or similar legal agreement is managed by a person in accordance with the terms of Article 3 (1) k) of the Due Diligence Act (Sorgfaltspflichtgesetz, SPG).
- The economic beneficiaries must be established in line with the definition contained in the due diligence legislation and entered in the electronic register.
- Consequently, in the case of corporations, including establishments or trust enterprises with corporate structures, as well as companies without personality, such natural persons must be identified and entered in the register who have a share/voting rights/a profit share of 25% or more in the said legal entities or who in any other manner exercise control over such legal entities.
- Consequently, in the case of foundations, trusts and establishments or trust enterprises with structures manner similar to foundations, all economic beneficiaries must be identified and entered in the register, irrespective of whether or not they exercise control.
- Consequently, legal entities may also be recorded and entered in the electronic register as members of foundation boards or boards of directors or of a trustee.
Reporting obligation in the event of inconsistencies
Those subject to due diligence obligations shall be under a duty to report any inconsistencies to the Office of Justice within 30 days from becoming aware of the same, which inconsistencies they shall identify as existing between the data entered in the register concerning the economic beneficiaries of legal entities and the information available to them with regard to the same. This shall also apply with regard to authorities.
Cross-linking of register
The register shall be cross-linked via the central European platform with the central registers of other EEA Member States.
Disclosure of data
- The Financial Intelligence Unit, the Financial Market Authority, the national police, the tax administration, the public prosecutor's office, the Court of Liechtenstein and the Liechtenstein Chamber of Lawyers may in an individual instance retrieve and inspect on an unrestricted basis the data entered in the register concerning the economic beneficiaries of legal entities.
- Upon application, the Office of Justice shall disclose to foreign banks and financial institutions as well as those subject to due diligence obligations in Liechtenstein the data relating to legal entities entered in the register for the purpose of fulfilling due diligence requirements.
- Nationals and organizations of Liechtenstein and foreign nationals and organizations may for a fee apply to the Office of Justice for disclosure of the data entered in the register relating to single corporations, including establishments or trust enterprises with corporate structures.
Restriction on the disclosure of data in the case of legitimate interests
The Office of Justice may entirely or partially restrict the disclosure of data to parties subject to due diligence obligations in Liechtenstein and third parties upon application from a legal entity if the said legal entity shall provide documentary evidence to the effect that, taking account of all circumstances of the individual case, disclosure runs counter to overriding legitimate interests on the part of the economic beneficiaries, for instance, if they:
- would be exposed to a disproportionate risk of fraud, abduction, racketeering and extortion, harassment, violence, or intimidation as a result of disclosure of data; or
- are minors or otherwise do not have capacity to enter into legal transactions.
- Legal entities existing at the time of entry into force of the Act establishing a Register of Economic Beneficiaries of Legal Entities, i.e. 1 April 2021, must notify the data relating to their economic beneficiaries to the Office of Justice within six months with effect from entry into force of the said Act, i.e. by 30 September 2021.
- Those subject to due diligence obligations shall be required to notify inconsistencies to the Office of Justice also by 30 September 2021.
Transfer of existing data to new database
The Office of Justice shall transfer the data entered in the 'Register of Beneficial Owners' by the time of entry into force of the Act establishing a Register of Economic Beneficiaries of Legal Entities on 1 April 2021 into the new 'Register of Economic Beneficiaries'. The differing definitions of the data to be entered under the existing and new legislation may lead to discrepancies. Consequently, the executive bodies of the respective legal entities must verify the accuracy of entries and, as required, implement modifications in line with the new statutory rules.
The legal entities/their executive bodies shall be responsible for correct and complete entry of data in the register.
Electronic data recording
It is anticipated that data recording shall be available with effect from 5 April 2021; this may be undertaken via the online portal https://vwb.llv.li using forms C-VwbP and T-VwbP.
Applications and reports to the register
Applications and reports to the Office of Justice, such as in order to disclose data, restrict disclosure or to report inconsistencies, must be submitted on paper using the corresponding official forms.
The Office of Justice is currently looking into options for electronic submission of applications and reports.
Assistance for affected legal entities
The Office of Justice shall inform the affected legal entities of the principal changes by way of e-mail sent to the contact entered in the register.
In addition, on the Office of Justice website, under the heading 'Register of Economic Beneficiaries' ('Verzeichnis wirtschaftlich Berechtigter'), further informative documents will be provided (e.g. guidance on the register of economic beneficiaries, information on technical requirements for registration ['step-by-step instructions'], FAQs).
Information as at 17 March 2021.
This article contains general information only and is not intended to address the circumstances of any particular individual or entity. By means of this article, EuropeFides or the author of the article are not rendering any accounting, business, financial, investment, legal, tax, or other professional advice or service. This article is not a substitute for such professional advice, nor should it be used as a basis for any decision or action that may affect your finances or your business. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. EuropeFides or the author of the article shall not be responsible for any loss whatsoever sustained by any person who relies on this article.