Beneficial ownership

In today’s instalment in our AMLR blog series, we take a closer look at the Chapter IV rules on transparency in relation to beneficial ownership. Earlier articles have examined how beneficial owners are to be identified and which substantive criteria apply. Readers seeking a deeper understanding of the core methodology for identifying beneficial owners, ownership interests and control are referred in particular to the earlier part of the blog series introducing the concept of beneficial owners.

The rules on beneficial ownership are central to obliged entities and form one of the foundations of the Union’s framework for preventing money laundering and terrorist financing. The AMLR strengthens harmonisation through directly applicable and more detailed requirements on which information must be collected, how it must be kept up to date and how it must be reported to central registers. While Articles 51–61 mainly address who is to be regarded as a beneficial owner and how identification is to be carried out in different structures, Articles 62–64 regulate the operational aspects of that information, namely which details must be obtained, how quickly they must be updated, who is responsible for reporting and how long the information must be retained. These articles are therefore essential to ensuring that the substantive beneficial ownership framework has practical effect.

Against this background, Morling Consulting supports businesses with qualified AML support for banks, fintechs and advisers. This includes, among other things, establishing internal processes for collecting and updating beneficial ownership information and adapting operations to the new deadlines and documentation requirements introduced by the AMLR.

Article 62 – Beneficial ownership information

Article 62 lays down the core quality requirements applicable to beneficial ownership information. Under this provision, legal entities, as well as trustees of express trusts and persons in equivalent positions in similar legal arrangements, are responsible for ensuring that the beneficial ownership information they hold and provide to obliged entities as part of customer due diligence measures, or report to central registers, meets certain basic criteria. The information must be adequate, accurate and current.

Article 62(1), second subparagraph, specifies which beneficial ownership information must be included. The following information must be covered:

• The beneficial owner’s full first name and surname, date of birth, country of residence and nationality, residential address, place of birth, identity document number and, where applicable, the unique personal identification number assigned to that person in the country where the person is habitually resident, including a general description of the source of that number.
• The nature and extent of the beneficial interest held by the beneficial owner in the legal entity or legal arrangement. This must be based on either ownership interest or control by other means. The information must also state the date from which the beneficial interest has been held.
• Information must be provided on the legal entity for which the natural person is the beneficial owner pursuant to Article 22(1)(b). Where the natural person is instead the beneficial owner of a legal arrangement, basic information on that arrangement must be provided.
• Where the ownership and control structure contains more than one legal entity or arrangement, the information must include a description of the structure, including the names and any identification numbers of the individual legal entities or arrangements forming part of it. It must also include a description of the relationship between them, including the proportion of the interest held.
• A general description of the characteristics of the category of beneficiaries, where such a category has been identified under Article 59.
• Where, in accordance with Article 60, objects of a power and takers in default of appointment have been identified:
  • The first names and surnames of natural persons,
  • The names of legal entities and arrangements,
  • A description of a category of objects of a power or takers in default of appointment.

Under Article 62(2), legal entities and trustees of express trusts, or persons holding an equivalent position in a similar legal arrangement, must obtain adequate, accurate and current beneficial ownership information within 28 calendar days of the creation of the legal entity or the establishment of the arrangement. Where changes occur, the information must be updated immediately and no later than within 28 calendar days, and at least annually.

Article 63 – Duties of legal entities in relation to beneficial ownership

Article 63 sets out the key obligations imposed on legal entities within the Union. All legal entities created in the EU must obtain and hold adequate, accurate and current beneficial ownership information. In addition to holding that information themselves, legal entities must also be able to provide beneficial ownership information to obliged entities when those entities carry out customer due diligence measures.

This provision is an important component of the AMLR because it makes clear that responsibility for correct and up-to-date beneficial ownership information rests primarily with the legal entity itself. Through this framework, obliged entities, supervisory authorities and central registers can rely on the information provided being reliable and current.

A central element of Article 63 is the duty to report beneficial ownership information to the central registers. The legal entity must report that information without undue delay after the entity has been created.

If the information changes, the legal entity must report all changes to the central register without undue delay, but no later than within 28 calendar days. In addition to the reporting duty, Article 63 requires legal entities to verify regularly that the information they hold is current and updated. Such verification must be carried out at least once a year. The Regulation nevertheless allows that review to be integrated into other recurring processes, for example when preparing annual financial statements.

Article 63 also makes clear that responsibility for accurate information does not rest solely with the legal entity itself. The beneficial owners of a legal entity, as well as other legal entities and trustees or persons in an equivalent position forming part of the legal entity’s ownership or control structure, in the case of legal arrangements, are required to provide the information necessary for the legal entity to comply with its obligations under the Regulation and to respond to requests for information received under Directive 2024/1640.

A particularly important aspect of the provision is Article 63(3), which addresses situations in which a legal entity, despite having used all available identification methods under Articles 51–57, is unable to determine any beneficial owner. This also covers situations where there is significant and well-founded doubt as to whether the persons identified are in fact the beneficial owners. In such cases, the legal entity must document the steps taken to identify beneficial owners.

Under Article 63(4), where a situation under Article 63(3) arises, legal entities must, when providing beneficial ownership information in accordance with Article 20 AMLR and Article 10 of Directive 2024/1640 on central beneficial ownership registers, provide the following:

• A statement that there is no beneficial owner, or that the beneficial owner could not be identified. The statement must also contain reasons why it has not been possible to identify a beneficial owner or why there is significant and well-founded doubt concerning the beneficial owner.
• Information on all senior managing officials of the legal entity who are natural persons. This must correspond to the information required under Article 62(1).

The concept of senior managing official is defined in Article 63(4) as “the natural persons who are executive members of the management body and the natural persons who exercise executive functions within a legal entity and are accountable to the management body for the day-to-day management of the entity”.

Article 63(5) also lays down requirements concerning access to information. Legal entities are required, on request and without delay, to make the information collected under Article 63 available to competent authorities.

Certain information must also be retained for a longer period. Information under Article 63(4) must be kept for five years. That period is to be calculated from the date on which the legal entities are dissolved or otherwise cease to exist. The information must be retained either by persons appointed by the entity itself to keep the records, or by administrators, insolvency practitioners or other persons involved. The central registers must be provided with a report containing the identity of the responsible person together with that person’s contact details.

Through these provisions, Article 63 establishes a coherent system under which legal entities are responsible for the collection, updating, reporting and retention of beneficial ownership information.

Article 64 – Trustees’ duties and beneficial ownership reporting

Article 64 contains an equivalent framework for express trusts and similar legal arrangements.

The provision applies to legal arrangements administered in a Member State or where the trustee, or a corresponding person holding an equivalent position in a similar legal arrangement, is resident or established within the Union. In such situations, the trustee and persons holding an equivalent position in a similar legal arrangement must ensure that a number of core details concerning the legal arrangement are collected. This includes the following:

• Basic information on the legal arrangement.
• Beneficial ownership information as provided for in Article 62. That information must be adequate, accurate and current.
• Basic information and beneficial ownership information where legal entities or legal arrangements are parties to the legal arrangement.
• Information on agents authorised to act on behalf of the legal arrangement or to take measures in relation to it, as well as information on the obliged entities with which the trustee establishes business relationships in the name of the arrangement.

The information collected as set out above must be retained for a certain period. Article 64 provides that the information must be kept for five years after the involvement of the trustee, or of the person holding an equivalent position, in the trust or arrangement has ceased. This ensures that relevant information remains available even after the arrangement has been terminated or transferred to another trustee.

As in Article 63, Article 64 also contains rules on reporting to central registers. The trustee or person holding an equivalent position must obtain and then report beneficial ownership information and basic information on the arrangement without undue delay after the arrangement has been established. In any event, this must occur no later than within 28 calendar days. The same deadline applies where the information changes.

The trustee or person in an equivalent position must also verify regularly that the information held under Article 64(1) is current and updated. Such verification must be carried out at least once a year and may take place as a standalone process, but may also be integrated into other processes.

Furthermore, Article 64(3) imposes a specific duty on the trustee or person holding an equivalent position in relation to obliged entities. When a business relationship is established or an occasional transaction is carried out and obliged entities apply customer due diligence measures, the trustee must clearly disclose that status and provide information on the beneficial owners of the arrangement as well as information on the assets being administered.

Article 64 also means that several other actors within a legal arrangement are under a duty to contribute to transparency. The other beneficial owners of a legal arrangement, in addition to the trustee or persons in an equivalent position, as well as its agents and the obliged entities administering the arrangement, and every person and trustee connected with legal arrangements, must provide certain information to the trustees or to persons holding an equivalent position in an arrangement. The information to be provided consists of the data and documentation required for the trustee or person in an equivalent position to comply with their obligations under this chapter. The same applies to persons forming part of the arrangement’s control structure at multiple levels and, where legal arrangements form part of that structure, to their trustees.

Under Article 64(5), trustees of an express trust and persons holding an equivalent position in a similar legal arrangement must make the information collected under Article 64 available to competent authorities. This must be done on request and without delay.

As with legal entities under Article 63, Article 64 also addresses situations in which beneficial owners cannot be identified. Where no person has been identified as a beneficial owner in relation to legal arrangements whose parties are legal entities, after all available methods under Articles 51–57 have been applied, the trustees or persons holding an equivalent position must document the steps taken to identify the beneficial owners. The same documentation requirement applies where, after the identification methods have been applied, there is significant and well-founded doubt that the identified persons are the beneficial owners.

In the situations described above, trustees or persons holding an equivalent position must provide certain information when they provide beneficial ownership information under Article 20 AMLR on customer due diligence and Article 10 of Directive 2024/1640 on central beneficial ownership registers. The following information must be provided:

• A statement that there is no beneficial owner, or a statement that the beneficial owners could not be identified. Reasons must also be provided as to why the beneficial owner could not be identified in accordance with Articles 51–57. Finally, the information must also cover what gives rise to doubt regarding the established information.
• Information covering all natural persons holding senior management positions in the legal entity that is party to the arrangement, corresponding to the information required under Article 62(1), second subparagraph, point (a) AMLR on beneficial ownership information.

Article 64 therefore ensures that complex legal arrangements are also subject to the same transparency requirements as traditional legal entities. The provision accordingly plays a central role in the AMLR’s overall strategy of preventing trusts and similar structures from being used to conceal beneficial ownership or to hinder the monitoring and tracing of economic assets.

Transparency and information duties in the beneficial ownership framework

Articles 62–64 together form a central part of the AMLR framework for transparency in relation to beneficial ownership. While the earlier articles define who is a beneficial owner, these provisions ensure that the relevant information is in fact collected, quality-assured, reported and retained. They make clear that the task of identifying beneficial owners is not limited to determining who ultimately controls a legal entity or legal arrangement. Equally important is ensuring that the information on those persons is accurate, complete and continuously updated. These rules are particularly important in an international financial system where ownership structures often extend across multiple jurisdictions and where transparency is critical to countering money laundering and terrorist financing.

Through harmonised deadlines, detailed information requirements and express documentation duties, a coherent system is created in which legal entities and trustees bear clear and primary responsibility for transparency. Obliged entities therefore receive a more reliable evidential basis for their customer due diligence measures, while competent authorities are given better conditions for effective supervision.

For businesses falling within the scope of the framework, this means that work relating to beneficial ownership increasingly requires structured processes, legal analysis and continuous follow-up. It is not enough to identify beneficial owners on a single occasion. The information must be verified, documented and updated on an ongoing basis as ownership and control structures change.

Against this background, Morling Consulting supports organisations and businesses with qualified AML support. Through legal analysis of complex ownership structures, review of customer due diligence processes and advice on AMLR implementation, we help businesses ensure that the identification and reporting of beneficial ownership comply with the requirements of the new EU regulatory framework. Such work is essential to establishing robust and legally sound processes in a regulatory environment where demands for transparency and documentation continue to increase.