Author: Nicola Sharp 24 February 2020
The European Commission is contacting member states that have not implemented the Fifth Money Laundering Directive. Rahman Ravelli considers what they should have done regarding registers of companies.
With the European Union’s 5th Money Laundering Directive (5MLD) having come into force on 10 January 2020, all EU states should have introduced registers of all companies incorporated in their territories.
These registers, which should be available for viewing by those with a legitimate interest, were to be created to show who ultimately controls – meaning who is the beneficial owner of - each company incorporated in the EU.
The aim was, according to the European Commission's website, "Enhancing transparency by setting up publicly available registers for companies, trusts and other legal arrangements." As regards trust companies, the Commission ruled that access to data on the beneficial ownership of trusts would be accessible without any restrictions to competent authorities.
But as some states missed the deadline for implementing 5MLD, the European Commission has stated that is set to take action against them unless they comply with the Directive within two months. The Commission has announced that it has sent letters of formal notice to eight countries for failing to notify it of their compliance with 5MLD. Cyprus, Hungary, the Netherlands, Portugal, Romania, Slovakia, Slovenia and Spain have not notified the Commission of any measures that have been implemented for 5MLD. Read the guide: A Brief Summary Of Money Laundering And How To Respond To Allegations.
In a statement, the Commission says: “The Commission regrets that the Member States in question have failed to transpose the Directive in a timely manner and encourages them all to do so urgently, bearing in mind the importance of these rules for the EU's collective interest.’’ The statement adds that without a satisfactory response from Member States within two months, the Commission may decide to send them reasoned opinions; which is a formal request to comply with EU law.
This article was also featured on Lexology.com.
Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.