On 31 May 2024, the European Union adopted two mayor anti-money laundering legal acts: the AML Regulation (AMLR) and the Sixth Anti-Money Laundering Directive (AMLD6). The new rules significantly reshape the approach to identifying and verifying beneficial owners. Obliged entities will be required to apply them form 10 July 2027.
Distinction between prospective and existing customers in the AML context
The AML regulation distinguishes between prospective and an existing customer, which has a direct impact on obligations concerning the identification and verification of beneficial owners.
Under the Regulation, the duty of obliged entities to apply customer due diligence measures is based on a prior risk assessment. Importantly, the process of establishing a business relationship or preparing to carry out an occasional transaction begins as soon as a customer indicates an interest in obtaining a service.
New definition of “Beneficial owner”
Under the AML Regulation, a beneficial owner is defined as natural person who ultimately owns or controls a legal entity, trust or similar legal arrangement.
In the case of legal persons, beneficial owners are natural persons who directly or indirectly hold ownership interests or exercise control— either through shareholdings or by other means.
Previous regulations set the identification threshold at more than 25% of shares or voting rights. Under the new framework, a beneficial owner is any person holding at least 25% of shares, stocks, voting rights or other ownership interests. In addition, the Regulation allows this threshold to be reduced to as low as 15%, particularly in sectors considered to present a higher risk of money laundering and terrorist financing.
New concepts and obligations introduced by the AML regulation
The new provisions also introduce additional definitions and mechanisms designed to ensure the accurate identification of beneficial owners:
- Indirect ownership interest – this is calculated by multiplying the shares or voting rights held in successive entities within the ownership structure and then aggregating the results across different ownership chains. As a result, all links in the ownership structure must be examined.
- Control through other means – the Regulation sets out an open catalogue of mechanisms that may indicate control, including veto rights, powers over strategic decision-making, formal or informal agreements and other rights independent of the ownership structure.
- Identification of beneficial owners by obliged entities – this includes the collecting information such as the beneficial owner’s full name, residential address and identification document number. Where the beneficial owner cannot be identified despite all available measures having been exhausted, the obliged entity must formally record that
Central registers of beneficial owners – access and scope of information
Both the AML Regulation and the AML Directive introduce new rules on central registers of beneficial owners. Under the Directive, access to such a data will depend on the category of the requesting entity.
Pursuant to Article 11 of the Directive, immediate, direct and unrestricted access to the register will be granted, among others, to:
- tax authorities,
- professional self-governing bodies,
- the European Public Prosecutor’s Office.
Access will also be available to obliged entities, including financial institutions, although in their cases it will be time-limited and fee-based access. The ach detailed conditions for such access will be determinied by each Member State.
Natural and legal persons outside these categories will be able to access to the register only if they demonstrate a legitimate interest, particularly in connection with prevention of money laundering. This group may include, for example, investigative journalists and civil society organisations.
The information disclosed in the register will cover identifying data of beneficial owners, details relating to trusts and statements confirming that beneficial owner could be identified. The extent of access will vary depending on the category of user:
- Category I – full access for public authorities;
- Category II – limited access, subject to national regulations, for obliged entities;
- Other users – access only to basic data, such as full name, month and year of birth, country of residence, nationality and the nature of ownership or control exercised.
Summary
The new anti-money laundering and counter-terrorist financing regulations introduce more stringent requirements foridentifying of beneficial owners and expand the obligations imposed on obliged entities. These changes are intended to enhance the transparency of ownership structures and strengthen the fight against financial crime. Timely adaptation of internal procedures and ongoing monitoring of new regulatory requirements will be essential to ensure compliance within the revised AML framework.
