We had previously announced that Minister Kaag of Finance would not extend the deadline by which organisations must have registered their UBOs in the UBO register (see our article Register UBOs by 27 March 2022 at the latest).
Although this deadline expired on 27 March 2022, the majority of UBOs have not yet been registered. The Ministry of Finance estimates that around 40 to 45% of those required to register have submitted their UBO information.
There is a great deal of controversy surrounding the UBO register. For example, Privacy First in the Netherlands brought summary proceedings against the state to have the UBO register suspended with immediate effect (The UBO Register: ‘Privacy First’ loses its appeal). A Luxembourg court has already referred questions for a preliminary ruling to the Court of Justice of the European Union. There are doubts as to the legal validity of the register, particularly with regard to its public nature.
Economic offence
Failure to register UBOs may be subject to criminal and administrative penalties. For example, it constitutes an economic offence, punishable by a prison sentence of up to six months, community service or a fine. The director of a company is responsible for registering the UBO of that company. Directors therefore bear the risk in this regard.
European Court of Justice
We previously reported that a Luxembourg court had referred questions for a preliminary ruling to the Court of Justice of the European Union (Case C-601/20). The court has asked the CJEU whether the obligation to disclose the data is lawful in the light of the right to respect for private and family life (Article 7 of the Charter) and the protection of personal data (Article 8 of the Charter). The CJEU’s ruling on the lawfulness of the general public access to the UBO register is expected in mid-2022. This will clarify whether public access will be upheld.
Motion
On 5 April 2022, the House of Representatives passed a motion ( Combating money laundering and terrorist financing | House of Representatives of the States General ) adopted with a request to the Government not to impose any fines or community service orders until the Court of Justice of the European Union has handed down its ruling, and to comply fully with that ruling. Furthermore, the motion calls for enforcement to be carried out on a risk-based basis only, focusing on significant risks of money laundering or other criminal activities.
This is in line with what Minister Kaag had already indicated. The Minister stated that leniency would be shown in any case if the registration was missing. If enforcement proceedings are to be taken at all, the company will first be given a further period in which to sort out the registration. Prior to the motion being adopted, the Minister had called for the motion to be amended so that enforcement would only take place on a risk-based basis.
Would you like more information about the UBO register? Then do read this article UBO register also approved by the Senate.