Will the new directive supporting the fight against legalisation of proceeds from crime prevent concealment of equity participations in companies?

On 20 May 2015, the European Parliament approved another directive – the fourth in a row –supporting the fight against the legalisation of proceeds from crime. Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing(the “Directive”) also commits Member States to guarantee greater transparency of ownership structures in companies and other legal entities registered in their territories, including the transparency of trusts.

In line with the Directive, it will be possible to identify the actual owners of a company and other legal entities, or the owner, beneficiary and administrator of trusts, based on information set out in the commercial register or other public register. In this regard, the Directive imposes on Member States the obligation to obtain and hold “adequate, accurate and current information on their beneficial ownership, including the details of the beneficial interests held.” However, the availability of data from public registers will not be unlimited. The Directive guarantees free access to information to designated bodies and “obliged entities”, such as financial and credit institutions. Public access to the register may, however, continue to be substantially restricted.

The public, i.e., natural persons/individuals or organisations, will be entitled to review the register only if they demonstrate “legitimate interest”. Member States will then be obliged to make accessible at least information about the name, the month and year of birth, nationality and country of residence of the beneficial owner as well as the nature and extent of the beneficial interest held. Nevertheless, Member States will be able to condition access to the register on prior registration online and a fee up to the administrative costs or refuse access to the register for special reasons. With regard to trusts, the Directive does not contemplate public access to them at all.

In relation to public institutions, the possibility to conceal equity participations in companies or trust ends upon implementation of the Directive into the law of the Member States. The public, however, may continue to not have access to such information without demonstrating serious reasons.

Member States are obliged to implement the obligations under the Directive into national legislation by 26 June 2017. One can only hope that the Directive will not be implemented into Czech law in such an extensive way that would, in the interests of money laundering, even more negate the purpose of various legal concepts, the essence of which is confidentiality.