The forth AML Directive, which has to be transposed into national law by 26 June 2017, aims to reinforce the battle against money laundering and financing of terrorism by enhancing transparency of the ultimate beneficial owners (UBO) and prescribing more stringent regulations and wider definitions in order to try and encapsulate more persons subject to due diligence.
It is worth noting that with the introduction of the forth AML Directive the 25% threshold of ownership or controlling interest, whether direct or indirect in a legal entity, has now become only indicative of beneficial ownership. Moreover, in the case of trusts, foundations and similar legal arrangements the definition of beneficial owner has also been significantly widened in that it now also encompasses the settlor, the trustee, the protector (if any), any other person exercising ultimate control and the beneficiaries where determined or otherwise the class of persons who will benefit from the trust – irrespective of whether their interest exceeds 25%.
It is also interesting to note that the forth AML Directive is more prescriptive in nature, in that it lays a non-exhaustive list of factors which must be taken into account when, both the Member States and also the subject persons conduct their Risk-Assessment.
The most debated introduction however remains the UBO Register. Corporate and other legal entities, including trustees where these generate tax consequences have an obligation to provide adequate, accurate, and up to-date information about the beneficial ownership including the details of the beneficial interest held to the UBO registry.
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