The Companies Act (Register of Beneficial Owners) Regulations (hereinafter referred to as the “Regulations”) have been amended to transpose certain provisions of the Fifth EU Anti-Money Laundering Directive (hereinafter referred to as the “5AMLD”) into Maltese law.
Regulation 5, which deals with the obligation for companies to hold accurate and updated records of beneficial owners regarding a specified list of particulars has been amended. The principal regulations placed the primary burden on the companies themselves to obtain such information from the beneficial owners and made it compulsory for such owners to comply. The amendment balances the burden as it places an equal obligation on beneficiaries to provide the required information to the company immediately and without the need of any initial request. The implications of this added responsibility are that if company beneficial owners are in default of complying with the above duties to provide the necessary information to companies, then such persons are also liable to a penalty.
Regulation 7, which deals with access to information on beneficial owners has also been amended. The 5AMLD obliges Member States to make such information freely accessible by members of the general public. Thus, the amendments significantly widen the accessibility to such information beyond simply the listed national authorities and specific persons carrying out legally required due diligence checks to “any member of the general public.” The general public shall have free access which is limited to the name, month and year of birth, nationality, country of residence and the extent and nature of the beneficial interest of the beneficial owners of a company. This specific amendment will come into force on the 1st January, 2020. Articles in the principle regulation that currently cater for persons with a legitimate interest to gain access to the above-mentioned information will become redundant and will therefore be deleted. The amendments further provide that access to information may be withheld, in full or in part, only in exceptional circumstances to be determined on a case by case basis if it is considered that access to such beneficial ownership information would expose the beneficial owner to disproportionate risk, risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation, or where the beneficial owner is a minor or otherwise legally incapable. Such restrictions shall not apply to credit institutions and financial institutions or to legal or natural persons carrying out either relevant financial business or relevant activities.
The amendments have introduced measures to ensure the maintenance of adequate, accurate and current information. It gives the Registrar of Companies the ability to make enquiries with companies, including but not limited to physical on-site investigations at their premises, if necessary, to establish or confirm the current beneficial ownership, provided that he has reasonable cause to believe that the information submitted to him is not entirely accurate. Additionally, the competent authorities with designated responsibilities for combatting money laundering and terrorist financing, as well as subject persons (any legal or natural person carrying out either relevant financial business or relevant activity) are bound to report any discrepancies they find between the beneficial information available to them and the beneficial ownership information held in the register of beneficial owners kept by the Registrar. The Registrar will have the responsibility of taking the appropriate actions to resolve such discrepancies, such as updating the information in the register, where necessary. In such cases where the Registrar resorts to updating the ownership information in the registry, company officers shall be liable to penalties up to €10,000.
The information on the beneficial owners of a company will also be available for 5 years after the name of the company has been struck off from the register. It shall be stored and kept available through the register of beneficial owners held by the Registrar and through the system of interconnection of registries.
Article written by Dr Cherise Abela Grech and Legal Trainee Mr Gigi Gatt.
This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.