FAQ on Ultimate Beneficial Owner (UBO) Register Requirements

You can download the full document here : https://www.l3a.lu/positionpaper

Preamble:

This “FAQ on Ultimate Beneficial Owner (UBO) Register Requirements” (the “document”, the “FAQ”) was prepared by L3A (the “Association”) and its respective working group of the Regulatory Committee and deals with questions raised in the context of UBO best practices for compliance and dealing with audits.

This document contains the working group´s answers to questions about UBO register requirements. The answers are not necessarily definitive and they might not be suitable for every circumstance.

This document is not meant to be an industry standard or a guide for best practices but it represents the view of the Association. The FAQ has not been validated by any authority.

It does not diminish the responsibility of each stakeholder using it to comply with the applicable rules on UBO identification. This document must not be relied upon as advice and is provided without any warranty of any kind and neither the Association nor their members who contributed to this document accept any liability whatsoever for any action taken in reliance upon it.

This document is drafted on the basis of rules in force and their understanding at the time of  publication. Generally, this document may be amended without prior notice to incorporate new material and to amend previously where the working group considers it appropriate. The Association will publish amended copies of this document to their members, showing marked-up changes from the immediately preceding copy. The Association strives to update this document to the best of its endeavours but is not legally bound to do so.

Readers are hereby informed that this FAQ is for the exclusive use of the Association´s members. No part of this document may be reproduced or transmitted, in any form or by any means, to non-members without the written and prior consent of the Association.

 Summary:

Introduction – Press Release:

Press article is dated September 2024 and deals with the police intervention  regarding non-compliance with UBO declaration and also remind the different obligations in this matter:  https://justice.public.lu/fr/actualites/2024/09/verifications-respect-loi-rbe.html

Legal background:

Art 3 (4) amended AML Law of 12.11.2004: part in yellow has been added by the law of 29/07/2022:

“The verification of the identity of the customer and of the beneficial owner shall take place before the establishment of a business relationship or the carrying-out of the transaction. Whenever entering into a new business relationship with a corporate or other legal entity, or a fiducie, trust or a legal arrangement having a structure or functions similar to trusts which are subject to the registration of beneficial ownership information pursuant to Article 30 or 31 of Directive (EU) 2015/849, the professionals shall collect proof of registration or an excerpt of the register (i.e. the Register of Beneficial Owners, hereafter referred to as “the Register”)  and compare their information with that of the register in order to detect either the existence of any erroneous data or the absence of all or part of the data, or the failure to register, modify or delete them. The professionals shall proceed in a similar manner in the framework of ongoing due diligence of the business relationship”.

Please note that the RBE (i.e. “Registre des Bénéficiaires Effectifs” / Register of Beneficial Owners) law date 13 January  2019 has been modified by the law of 23 January 2025 and the articles 8 and 9 related to the discrepancy reports have been modified (https://www.cssf.lu/wp-content/uploads/L_130119_Registre_ben_effect.pdf).

The UBO (Ultimate Beneficial Ownership) requirements in Luxembourg are part of a broader framework aimed at enhancing transparency and combating financial crimes, such as money laundering and terrorist financing. The RBE (Registre des Bénéficiaires Effectifs) was introduced as part of these efforts, ensuring that entities registered in Luxembourg accurately disclose their beneficial owners. This document covers the legal requirements, registration process, obligations, penalties, and ongoing compliance measures for entities under the relevant UBO legislation.

Question 1:  What is the UBO Register?

The UBO Register is a public register that contains information about the ultimate beneficial owners of entities registered in Luxembourg. It was established by the Law of 13 January 2019 and aims to enhance transparency in the financial sector.

Question 2: Who must register in the UBO Register?

All entities registered in the Luxembourg Trade and Companies Register (RCS) must register their beneficial owners in the UBO Register. This includes companies, non-profit organizations (ASBLs), civil companies, and trusts.

Question 3: What is the deadline for UBO registration?

The UBO registration requirement came into force on 1 March 2019. Entities must register their beneficial owners without delay upon incorporation or whenever there is a change in the ownership structure.

Question 4: What are the verification obligations?

According to the amended AML Law of 12.11.2004 (Art 3 (4)), professionals must verify the identity of the customer and beneficial owner before entering into a business relationship. This includes verifying the registration of beneficial owners in the RBE and comparing the data against internal AML/KYC files to detect any discrepancies.

Question 5: What are the consequences of non-compliance?

Entities that fail to comply with UBO registration requirements may face administrative and criminal penalties, including fines ranging from €1,250 to €1,250,000.

Question 6: What information needs to be provided for UBO registration?

Entities must provide the full name, date of birth, nationality, country of residence, nature and extent of the beneficial interest held, and the national identification number of each beneficial owner (if a Luxembourg national identification number exists, this should be provided as well).

Question 7: How often must UBO information be updated?

UBO information must be updated whenever there is a change in the ownership structure or when any details previously registered are no longer accurate.

Question 8: What are the common errors in UBO registration?

Common errors include inaccurate information, failure to update changes promptly, and incomplete submissions. These errors can result in investigations and potential legal consequences.

Question 9: Who can access the UBO Register?

The UBO Register is accessible to competent authorities, financial institutions, and, in some cases, the general public or a European professional journalist, depending on the sensitivity of the information and to the extent that they demonstrate a legitimate interest in accordance with the law.

Question 10: What are the ongoing obligations for entities registered in the UBO Register?

Entities must ensure their UBO information is accurate, complete, and up-to-date and that they have the records to support their UBO registration. They must also cooperate with authorities during audits or inspections.

Question 11: What should be reported?

The RBE law, as amended on 23 January 2025, requires that any discrepancies identified in the UBO data must be reported to the RBE manager. The RBE manager can impose sanctions on entities that do not respond to verification requests within 30 days.

Question 12: How are breaches of UBO regulations enforced?

Breaches of UBO regulations are enforced through inspections by the police, prosecutors, and financial regulators. Investigations can lead to significant fines and, in severe cases, criminal prosecution.

Question 13: What are the consequences of Non-Compliance?

Entities that fail to address discrepancies or fail to respond to verification requests can face administrative fines or, in severe cases, the forced radiation of the company from the UBO register (without either dissolution or loss of legal personality). The register can also display on its website the non-compliance of the company, and after a seven months non-compliance period, can impose a daily penalty of EUR 40.

 Non-compliant entities can be further placed on a confidential list shared with the police and state prosecutors for further investigation.

Question 14: What are the Best Practices to be compliant?

·        Complete all necessary UBO information in the RBE accurately and in a timely manner.

·        Regularly cross-check RBE data with AML/KYC records to ensure consistency.

·        If discrepancies are identified, contact the client for corrections before notifying the RBE.

·        Respond to any RBE letters within 30 days to avoid further penalties. A response should be provided even if only to confirm that the current filing is correct.

Question 15: What are the Best Practices to be compliant for entities in a fund structure?

It is noted that the UBO register performs consistency checks on the data filed, including verifications against related entities. The recommended approach in a fund structure is therefore as follows:

·        Any modifications on the UBO register filing of the General Partner should be considered first;

·        Once the above is validated, the UBO register filing of the fund can, if relevant, be modified; and

·        Finally, the update of UBO register filings can be performed in a last step for any subsidiaries of the fund.

Taking into account that a validation by the register can take one to few days, the above needs to be carefully considered to determine the timeline of the filing in order to meet legal deadlines.

Question 16:  Who is liable for the UBO register filing?

The responsible party for the UBO register filing is ultimately the company and therefore its board of directors. The fund administrator cannot be held liable for the missing UBO register filing based on the UBO register law, but should ensure to properly inform its clients of the Luxembourg legal requirements and to monitor the client’s compliance. The fund administrator should also perform the UBO register filing on behalf of the client company when mandated to do so.

In some limited cases, fund administrators have noted companies being incorporated at their address without the administrator’s prior approval, in which case they should not be held liable for the missing UBO register filing.

Fund administrators should however ensure to perform a monitoring over such cases, to address other potential impacts such as AML compliance.

Recommendations:

·        Users of the information of the RBE have to verify such information always against their own documentation at the AML/KYC file.

·        Check the RBE extract to ensure consistency with information contained in the AML / KYC file.

·        Perform the RBE completion of all necessary information always in time and diligence on the process.

·        Maintain accurate and up-to-date UBO records.

·        Implement regular audits to verify UBO data accuracy.

·        Train staff on the importance of UBO compliance and ongoing due diligence.

·        In case of receipt of a letter from the Register, the request has to be answered within 30 days to avoid further non-compliance and consequences by police / state prosecutor.

Conclusion:

The UBO register plays a crucial role in promoting transparency and accountability within the financial system. By adhering to UBO requirements, entities can reduce the risk of financial crime, avoid significant fines, and protect their reputational standing.

Continuous improvement in compliance practices and proactive engagement with clients are essential for long-term success in this area. Users of the information of the RBE have to verify such information always against their own documentation at the AML/KYC file.

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