Beneficial ownership at the heart of new AML/CFT E.U. regulations

Customer Due Diligence

As put in the proposed regulation, “accurate identification and verification of data of prospective and existing customers are essential for understanding the risks of money laundering and terrorist financing associated with clients, whether they are natural or legal persons.”

The amendments to rules on Customer Due Diligence (“CDD”) include provisions to better frame CDD in cases where remote customer onboarding is carried out.  The proposed regulation also provides that obliged entities shall conduct ongoing monitoring of the business relationship performed by the customers (Article  21).

Furthermore, when obliged entities are unable to comply with the requirement to apply customer due diligence measures, they shall terminate the business relationship and consider filing a suspicious transaction report to the FIU in relation to the customer (Article 17). 

Beneficial Ownership

The provisions on beneficial ownership information in the European Commission’s proposal build on those in current EU AML/CFT legislation, including the concept of beneficial ownership and the requirement for all corporate and other legal entities to obtain and hold adequate, accurate and current beneficial ownership information. 

Nevertheless, the proposal includes disclosure requirements for nominee shareholders and nominee directors, and introduces the obligations to register their beneficial ownership in the Union for non-EU legal entities that either enter into a business relationship with an EU obliged entity or acquire real estate in the Union.