On 1 August 2021, new changes amending the Money Laundering Act (Geldwäschegesetz – GWG) were implemented. These changes will require (almost all) companies and associations to take action with regards to the transparency register (Transparenzregister).

Background to the Transparency Register

In order to combat money laundering throughout Europe, at the end of 2017 the Money Laun- dering Act introduced the obligation for companies and associations to indicate their ultimate beneficial owner in the Transparency Register. However, many companies were exempt from this requirement in case they fulfilled the so-called Meldefiktion (Reporting Fiction). The Re- porting Fiction was applicable in cases where the beneficial owners could be retrieved electron- ically from another public register such as the commercial register (Handelsregister) or the register of associations (Vereinsregister). For example, shareholders of German limited liability companies (GmbH) are indicated in the so-called list of shareholders (Gesellschafterliste), which can be accessed via the commercial register. In such cases, the beneficial owner of a GmbH is considered as (indirectly) listed in the transparency register. This indirect listing allowed for an exemption to actually register the ultimate beneficial owner in the transparency register.
This exemption is now no longer applicable, i.e. the exemption of the Reporting Fiction can no longer be referred to.

New regulation of the general obligation to register

In the future, all legal entities under private law and registered partnerships must indicate their
beneficial owners and have them entered into the transparency register. The information in the entry has to be kept up to date at all times.

Which entities are required to make an entry?

The changes to the Money Laundering Act will have an impact on all limited liability companies
(GmbH), stock corporations (AG), partnerships limited by shares (KGaA), European Companies (SE), trusts, general partnerships (OHG), limited partnerships (KG), GmbH & Co. KGs, cooper- atives, partnerships, registered associations and foundations.
Simply put, the new regulation requires all companies, registered associations and foundations, with the exception of sole proprietorships and partnerships under civil law (GbR) to take action.

What are beneficial owners?

Beneficial owners are the natural persons who own or control the company directly (i.e. them-
selves) or indirectly (i.e. through other companies). Beneficial owners are those natural persons who directly or indirectly control at least 25% of the capital or voting rights or exercise control in a comparable manner.
All trust constellations are therefore also subject to reporting requirements. In the case of multi- level constellations, the natural persons ultimately in control as described above have to be disclosed.

What has to be reported?

• First and last name of the beneficial owner
• Date of birth
• Place of residence
• Nature and extent of beneficial interest
• All nationalities

What is the deadline for the initial registration?

Immediately: In case the Reporting Fiction was not applicable to begin with, all parties,
which are within the scope of the Money Laundering Act, have to register immediately for the Transparency Register. Such may for example be the case, if the list of shareholders in the commercial register cannot be accessed electronically or the list cannot be used to iden- tify the ultimate beneficial owner. In these cases, the entry now has to be made urgently in order to avoid late filing penalties.

Transitional periods: parties, which up until now were able to benefit from the Reporting
Fiction and have hence not yet reported their ultimate beneficial owner, now have to take action. That means, the deadline for the registration for the Transparency Register is:

• 31 March 2022 for stock corporations (Aktiengesellschaft), SEs, partnerships limited by shares (KGaA)
• 30 June 2022 for limited liability companies (GmbH), partnerships (Partnerschaft) and cooperatives (Genossenschaft)
• 31 December 2022 for all others, such as OHGs, limited partnerships (KG), associations (Vereine), etc.

For registered associations (eingetragene Vereine (e.V.)), the data already entered into the register of associations (Vereinsregister) is automatically transferred to the Transparency Reg- ister. Consequently, e.V.s only have to make sure, that the entry in the register of associations is up to date.

Once off done?

In addition to the initial registration, there is an obligation to keep the entry up to date constantly.

Missing or incorrect information can lead to fines of up to 5 million EUR or 10% of the total turnover.

How to register?

The notification is made via the online portal of the Transparency Register at Bundesanzeiger Verlag. Prior registration is required.

Unfortunately, the portal is not self-explanatory from our point of view and, in our opinion, sometimes not easy to understand. The beneficial owner or, in the absence thereof, the fictitious beneficial owner must be reported.

Who exactly this is may be difficult to identify and must be checked for each case individually. In case of uncertainty, please feel free to reach out to us. We will be happy to assist you.

If you have not yet entered your company into the Transparency Register, you can also have our Auren team make the entry or update the information entered in the Transparency Register.

Do you need support? Feel free to contact our consultants directly.

Status: 05.10.2021 Authors: Eulalia Galceran, Tax Lawyer & Oliver Haaga, Attorney at Law/Tax Consultant

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