Register of beneficial owners: wider access for transparency purposes
Free translation – for information purposes only
In order to combat money laundering and terrorist financing, France has set up a register of beneficial owners of legal entities, access to which has been extended and the sanctions strengthened to improve its effectiveness.
However, this policy of financial transparency cannot be developed without certain limits.
The content of the register of beneficial owners
Implemented in 2017, the register of beneficial owners of legal entities gathers a lot of information(Article R. 561-56 of the Monetary and Financial Code), including:
- the name, legal form, address of the registered office and the unique identification number of the company,
- the identity, date and place of birth, nationality and home address of natural persons,
- the nature, manner and extent of the control exercised by the natural persons over the target company, and the date on which they became the beneficial owners of the company. To be a beneficial owner, individuals must either directly or indirectly hold more than 25% of the share capital or voting rights or exercise control over the company.
Access to the register of beneficial owners extended and facilitated
Initially, the consultation of the register of beneficial owners was limited to the company having filed the declaration, to the authorities (judicial authorities, customs agents, tax authorities, investigators of the Autorité des Marchés Financiers, services subject to the fight against money laundering and the financing of terrorism) and to any person justifying a legitimate interest
Ordinance No. 2020-115 of February 12, 2020 strengthening the national anti-money laundering and counter-terrorist financing framework, transposing European Directive 2018/843 of May 30, 2018, amendedArticle L. 561-46 of the Monetary and Financial Code and expanded its access to the general public.
Some information is now freely available on the DATA INPI website.
However, while the judicial authorities, anti-money laundering and anti-terrorist financing services, tax authorities and customs authorities have access to all the information in the register, the general public can only consult certain information, such as the full name, month and year of birth, country of residence, nationality of the beneficial owners and the extent of their beneficial interest in the company concerned.
Strengthened obligations and sanctions
According toarticle L. 561-45-1 of the French Monetary and Financial Code, certain legal entities, including companies, economic interest groups and associations subject to registration in the Trade and Companies Register, are required to declare their beneficial owners. If they fail to declare or if their declaration is false or incomplete, these legal entities and their legal representatives may be sanctioned.
TheOrder of February 12, 2020 introduced a new obligation for beneficial owners. They must provide companies and entities that request it with all the necessary information to enable them to file their declaration with the register, within 30 working days of the request (Articles L. 561-45-2 and R. 561-59 of the Monetary and Financial Code).
Failure to provide information or providing inaccurate or incomplete information constitutes a criminal offence that may be punishable by six months’ imprisonment and a fine of €7,500(Article L. 574-5 of the Monetary and Financial Code).
A financial transparency to be framed
The development of access to the register of beneficial owners, on the grounds of increasing financial transparency, does however raise some questions.
On the one hand, the information in the register of beneficial owners could be used for purposes other than the prevention of money laundering and terrorist financing. For example, the tax authorities could use it in their fight against tax fraud.
On the other hand, while public access to the register of beneficial owners has certain interests such as control of information by civil society, greater public trust in companies and financial markets and accountability of economic actors, the risks of privacy breaches should not be ignored. To address this difficulty, European Directive 2018/843 of May 30, 2018 called for a balance to be struck between financial transparency and the fundamental rights of beneficial owners, in particular by limiting the publication of personal information to that concerning the status of the beneficiaries and the area of economic activity in which they operate.
Contact the author – Cyril Maucour – Tax Lawyer – AlterTax Avocats
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