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08.01.2021 | KPMG Law Insights

Money laundering – Transparency register and Corona assistance programs – Rapid examination and action required

Transparency Registry and Corona Assistance Programs – Rapid Review and Action Needed

Money laundering laws do not stop at Corona assistance programs. As part of the application for various Corona assistance, it is required that the applicant state “that it will provide owner transparency.” In this context, it is clear from the respective annexes to the implementation instructions for the granting of aid that “owner transparency” goes even further than what is required by the Money Laundering Act (GwG) with regard to the disclosure of beneficial owners. This concerns, for example, the so-called “Überbrückungshilfe II” as well as the “Novemberhilfe” and “Dezemberhilfe”.

This is also pointed out by the Lower Saxony Chamber of Tax Advisors in a notification dated December 22, 2020. Accordingly, an entry in the transparency register is required even if the company is not expressly exempted from Section 20 para. 1 AMLA is covered. In particular, civil law partnerships (GbRs) are mentioned as an example in the annex to the implementation instructions for Bridging Assistance II. Applicants for Corona assistance should therefore check whether their transparency register status meets current AMLA requirements or fulfills the requirements for “owner transparency”, which has been expanded in some cases.

Ensuring the Owner transparency – are the obligations that already existed fulfilled?

On the one hand, the annex to the enforcement instructions stipulates as a requirement that the actual ownership relationships of the applicants must be verified by entering their beneficial owners in the transparency register(www.transparenzregister.de) within the meaning of Section 20 (1). 1 AMLA must be disclosed. An exception exists only in the case of the notification fiction of § 20 para. 2 GwG, if the information on the beneficial owners is derived from a document referred to in Section 20 para. 2 sentence 1 GwG (Commercial Register, Register of Partnerships, Register of Cooperatives, Register of Associations or Register of Companies) can be accessed electronically.

When submitting their application, companies should therefore make sure that they have complied with the obligation to report to the transparency register and that the information is (still) correct from the aforementioned registers.

In this context, particular attention should be paid to the FAQs of the Federal Office of Administration – as the competent authority for the prosecution and punishment of administrative offenses in connection with the Transparency Register – on the Money Laundering Act and the Transparency Register respectively (cf. see also our client information “Transparency Register – Update 2020“). In the FAQs updated on August 19, 2020, so-called negative control, e.g. in the form of a blocking minority, is also considered sufficient for the status of beneficial owner. This also applies to multi-level shareholding structures. Since corresponding agreements in the articles of association, partnership agreements or other contractual provisions are in part not recognizable to outsiders, a corresponding report may have to be submitted to the transparency register, since in such a case (in the opinion of the BVA) beneficial owners exist who are not evident from the registers.

With regard to the reporting obligations under money laundering law to the (German) transparency register, subsidiaries of foreign companies cannot refer to entries in foreign registers, so that it must also be checked here whether a reporting obligation to the transparency register exists and whether this has been fulfilled accordingly.

Obligation to register companies that are not required to report to the transparency register under money laundering law

On the other hand, the annex to the enforcement instructions states that the obligation to be entered in the transparency register in connection with the provision of support services also applies to applicant companies that are not expressly covered by Section 20 (1) AMLA (e.g. foreign companies with a permanent establishment in Germany, GbRs, but not registered traders). However, the obligation does not apply to foreign companies if they have already submitted corresponding information to another register of a member state of the European Union.

On this basis, when applying for Corona assistance programs, it may be necessary for GbRs in particular to have their beneficial owners entered in the transparency register if a corresponding owner transparency declaration is required as part of the application process. On the website of the Transparency Register(www.transparenzregister.de), it is generally possible to enter “other legal arrangements of any kind”. This must be done before applying for the Corona assistance programs, but in any case it should be done urgently if it was neglected when the application was submitted.

The experts in our practice group will be happy to support and advise you on the necessary review of legal issues in connection with the German Transparency Register.

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