02/10/23

REGULATION: Spain launches Central Register of Beneficial Owners to fight financial crime

As published on: lexology.com, Monday 2 October, 2023.

Register complies with EU anti-money laundering and terrorist financing directive

On 19 September 2023, Royal Decree 609/2023, of 11 July, which created the Central Register of Beneficial Owners and approved its regulations, entered into force.

The Central Register of Beneficial Owners (CRBO) has been created in order to comply with articles 30 and 31 of 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 and the third and fourth additional provisions of Law 10/2010 of 28 April 2020 on the prevention of money laundering and terrorist financing.

This new central electronic register, which is unique in Spain, will be accessible "24-7, 365" a year and will be managed by the Ministry of Justice, with headquarters in the Directorate-General for Legal Security and Public Faith.

Information in the CRBO

The aim of the CRBO is to collect and provide information on beneficial ownership as set out in articles 4, 4a and 4b of Law 10/2010 and article 4 of the Regulations of the CRBO, including the criterion by which it is qualified. The entities obliged to verify or provide information are:

• Spanish legal entities.

• Entities or structures without legal personality, which have their effective centre of management or principal business activity in Spain or which are administered or managed by natural or legal persons resident or established in Spain.

• Entities or structures without legal personality which are not managed from any EU country or registered by any other Member State and intend to develop business relations, carry out occasional operations or acquire real estate in Spain.

Sources of information

The CRBO will obtain the necessary data by means of a first data dump from the competent registers and databases, which should be carried out within nine months after the entry into force of the royal decree. Daily updates will follow. In the event of discrepancies, the most relevant data will prevail, that is to say, the most recent or reliable data according to the way in which it has been obtained.

After the data dump has been carried out, the obliged entities must check that the information is adequate, accurate and current. If it is not, they must submit a supplementary declaration before 19 November 2023. In addition, the following particularities are envisaged:

• Trusts and similar entities or structures without legal personality shall submit a first declaration by 19 November 2023.

• Foundations, associations and, in general, all legal persons, trusts and similar entities or structures without legal personality whose beneficial ownership has not been registered shall submit a first declaration to the CRBO within one month after their incorporation or as soon as they are obliged to identify the beneficial owners. In addition, regardless of whether or not there have been changes in beneficial ownership, they shall submit an annual declaration in January.

• In the case of business companies, the beneficial ownership declaration form used when filing the annual accounts will be adjusted to provide the information required by the regulation. In the event of changes in the ownership, a new declaration must be submitted.

• Investment funds management companies are obliged to declare the beneficial owners of the funds they manage.

Access to information

Access to the CRBO information shall be carried out using an electronic model and after the applicant's identity has been authenticated. Access may be denied with a justification in those cases involving a disproportionate risk for the beneficial owner.

• Free and unrestricted access. The authorities competent for money laundering and terrorist financing and its predicate offences of any EU country; notaries and registrars and their preventive bodies and national and European authorities and entities dealing with European funds.
• Access upon payment of a fee and proof of a legitimate interest. The persons subject to Law 10/2010, who must request a certification or an extract in order to be able to comply with their obligation under the aforementioned law and whose legitimate interest will be presumed provided that they state the reason for their consultation and it is in accordance with the purposes of the CRBO; all other persons or entities that can demonstrate a legitimate interest, which is presumed in the case of media or civil society organisers dealing with the prevention and fight against money laundering and terrorist financing, and when the consultation is carried out by the entity itself or by one of the natural persons that appear as a beneficial owner of the entity in the CRBO.

 

Non-compliance with the obligation to declare

Pursuant to the provisions of article 378 of the Commercial Registry Regulations, failure to comply with the obligation to identify and inform the CRBO, either due to the lack of identification in the beneficial owner declaration form or due to the lack of proof of the identification by omission when filing the annual accounts in the case of legally obliged entities will result in the closure of the registration sheet.

In addition, it will give rise to an administrative offence. The seriousness, possible penalties and sanctioning procedure for such offence will be determined by the Ministry of Justice, which will exercise its power to impose penalties. However, this point has yet to be developed.

Interconnection with EU Member States

The CRBO will be connected to the Central European Platform and will allow access, initially to the Spanish authorities, and subsequently, to Spanish obliged parties, to information from registers of beneficial ownership in other Member States. Similarly, other member states will be able to access the information contained in the CRBO.

First procedures enabled

Requests are now already available for initial access to CRBO information by the media and non-government organisations; the registration, modification or deletion of a trust; opposition to the processing of information or exclusion of data; and appeals against refusals to provide information. During the transitional period of nine months, the remaining procedures will be made available.

Controversial aspects

Although the existence of a single register suggested that the obliged parties under Law 10/2010 could comply with full legal certainty with their duty to identify the beneficial owner by obtaining a certificate, the regulation itself establishes that the obliged parties cannot rely solely on the information contained in the CRBO and must carry out the appropriate additional checks.

Despite the fact that it is a single, electronic register, the obliged parties must pay a fee to have access to the information, when their access is a legal obligation.

Osborne Clarke comment

Finally, in relation to the consequences of non-compliance, the closure of the registration sheet is redundant, since the closure itself is already contemplated in the lack of identification of beneficial ownership in the annual accounts.

Moreover, the opportunity to establish the penalty regime and provide the non-compliance system with the necessary legal certainty is lost, as this remains in the hands of the Ministry of Justice and is still to be specified.

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Regulation Spain Beneficial Ownership