In April 2022, Minister Kaag gave the go-ahead to begin enforcing the UBO register (you can read more about this enforcement here). At the time, Kaag announced in the Chamber letter It was also noted that a temporary scheme would apply until 1 September 2022 for institutions subject to reporting requirements when accepting new clients. As 1 September draws nearer, the Ministry of Finance has confirmed that the temporary scheme has been extended until 1 January 2023.
The temporary arrangement
The basic principle is that institutions subject to reporting obligations are required to use information from the UBO register when carrying out customer due diligence. Institutions subject to reporting obligations include banks, insurers, accountants, tax advisers, solicitors and notaries. Under the temporary arrangement, when accepting new clients, reporting institutions need only verify that the UBO declaration has been made, together with the client’s explanation of which UBO details and supporting documentation have been provided. The registration therefore does not yet need to be evident from the UBO register.
Why renew?
The deadline for organisations subject to UBO reporting requirements to register their UBOs expired on 27 March 2022. Many companies waited until the very last moment to register their UBOs. As a result, processing times at the Chamber of Commerce have increased. Due to this peak in demand, it may take a few months before all submissions have been processed, meaning it will take longer for submissions to be converted into entries in the UBO register. To prevent longer processing times from disrupting the services provided by institutions subject to the reporting obligation to new clients, the scheme has been extended.
So what now?
The UBO register is a hot topic. Although the deadlines have passed, by no means all legal entities have registered their UBOs. As we wrote earlier (Launch of enforcement of the UBO register) the fine for failing to register the UBO can amount to €22,500, and proceedings are still pending before the Court of Justice of the European Union (Case C-601/20) in which the court must rule on the legality of making the UBO register publicly accessible. The Chamber of Commerce, too, has not got its house in order and is facing a significant backlog in processing UBO registrations. The temporary arrangement has now been extended until 1 January 2023. What is next? A further postponement of the use of the UBO register or a ruling from the Court of Justice of the European Union?
The show must go on!