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By Marcus Hoy
A new registry targeting money launderers and tax avoiders will oblige most Swedish legal entities to provide details identifying who ultimately owns or controls them.
The registry is part of the Swedish Finance Ministry’s plans to implement the European Union’s updated Fourth Anti-Money Laundering Directive, or MLD4 (2016/0208) into domestic law. This will oblige all EU member states to store identities of the beneficial owners of companies in a central database.
Ownership details of companies that carry out cash transactions of over 5,000 euros ($5,296) will also have to be included in the registry, according to information provided March 8 to Bloomberg BNA by Sweden’s Finance.
This makes Sweden’s application of the rules stricter than the EU directive, where the requirement for company owner details begins at the 10,000 euro threshold.
The Finance Ministry’s plans, published in a Feb. 23 draft bill, are in line with the EU’s push for more sunlight on exactly who information on who really owns, controls and benefits from EU companies and trusts since such details often are hidden for tax evasion and money laundering purposes.
Approved by the EU Commission on June 5, 2016, the amendments to MLD4 define beneficial owners as owners of at least a 25 percent stake in a company or other legal entity. If a company’s actual beneficial owners can’t be identified, governments will be permitted to deem directors as beneficial owners even if they have no legal or beneficial interest in the company. While the creation of a registry is compulsory, EU nations are allowed some flexibility on its format and who has access to it.
MLD4 requires EU member nations to retain “adequate, accurate and current information on beneficial ownership.” Timely access must be provided to:
While companies with over 5,000 euros ($5,296) must be included in the registry, some exemptions for non-governmental organizations are likely to be included.
In line with EU requirements, banks will also be subject to new documentation requirements designed to combat terrorist funding and money laundering. The Swedish Companies Registration Office (SCRO) is tasked with drafting the law, and will also have responsibility for implementing and maintaining the registry.
“Registration should be rather easy for most companies,” SCRO Chief Legal Officer Peter Kallenfors told Bloomberg BNA March 8. “In some cases, however, problems could arise if company boards do not know who the beneficial owners are. In such cases, companies should start looking into this now, because this is information that needs to be submitted.”
While most of the legal requirements had been decided upon, Kallenfors said, questions still remained over how transparent the registry would be and whether registrants would be charged fees. As far as he was aware, he said, no other EU nation charges a fee for inclusion in a beneficial ownership registry.
The 5,000 euro threshold was likely to be included in the final draft of the law, he said, as well as the proposed exceptions for NGOs.
While he fully expected the law to be approved by parliament, Kallenfors added, the EU-mandated June 26 enactment deadline could potentially be delayed in Sweden. Companies will be required to register in the six months following the bill’s enactment into law, he said.
In a March 7 statement, KPMG director Viveka Strangert told Bloomberg BNA that it was unlikely that any major changes would now be made to the proposal.
“This new law will entail an extra administrative burden for companies that are included in the register, as they will be obliged to promptly submit any changes to their beneficial owners” she said.
She noted, however, that the law “will release resources for financial institutions as they will be able to download information from the register instead of implementing routines to update the information on their own.”
“The next step is that the government will publish a proposal that most likely will be very similar to the draft bill that has now been launched,” Strangert said. “The SCRO will probably issue more detailed rules on questions such as which format the information should be submitted in.”
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The draft bill is available in Swedish at: http://www.regeringen.se/4929b6/contentassets/ba1912f8a2de4b2bb46af4750999476c/ytterligare-atgarder-mot-penningtvatt-och-finansiering-av-terrorism
The amended Fourth Money Laundering Directive is available in English at http://ec.europa.eu/justice/criminal/document/files/aml-directive_en.pdf
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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