Welcome to our blog series on the EU AMLR, where we continue our analysis of Chapter IV on transparency in relation to beneficial ownership. Obliged entities’ duties to promote and ensure transparency around beneficial ownership are a central component of the AMLR in preventing money laundering and terrorist financing. The purpose of the regulation is to ensure that the natural persons who ultimately own or control legal structures can be identified and that the information is available to obliged entities and competent authorities.

Earlier parts have focused on how beneficial owners are to be identified in different types of legal entities and legal arrangements. For readers who wish to examine the basic identification criteria in greater depth, particularly how control and ownership interest are used as starting points, we refer to an earlier part of the blog series where beneficial ownership through control and ownership interest is addressed in more detail. Articles 65–67 complement the framework by dealing with specific situations in which either exemptions from the obligations may apply or additional requirements are imposed on particular actors, such as nominee representatives and foreign legal entities.

Morling Consulting assists businesses with qualified advisory services within the scope of AML expertise for the financial and advisory sectors. This includes analysis of complex ownership structures, advice on the identification of beneficial owners and implementation of processes to ensure compliance with the AMLR’s requirements for transparency, documentation and reporting.

Article 65 – Exemptions from Beneficial Ownership Requirements

In the preceding blog post, we addressed the obligations of legal entities under Article 63 and the obligations of trustees under Article 64. Article 65 contains provisions on exemptions from the obligations that otherwise apply to legal entities and legal arrangements under Articles 63 and 64. In essence, these articles establish the obligation to obtain, document and report beneficial ownership information to central registers, and to provide such information to obliged entities when customer due diligence measures are carried out.

The exemptions in Article 65 are relatively limited and concern specific situations. The provision covers two main categories: certain listed companies and bodies governed by public law. The article provides that Articles 63 and 64 shall not apply to the following:

• Companies whose transferable securities are admitted to trading on a regulated market, provided that the effective control is exercised exclusively by the natural person holding the voting rights in the company, the ownership or control structure contains no other legal persons or legal arrangements, and entities established outside the Union in accordance with Article 67 are subject to requirements equivalent to the requirements set out above under international standards.
• Bodies governed by public law as defined in Article 2(1)(4) of Directive 2014/24/EU on public procurement.

Article 65 therefore illustrates how the AMLR balances transparency requirements against proportionality. In situations where the risk of misuse is considered limited, or where transparency is already secured through other regulatory frameworks, certain administrative obligations may be exempted.

Article 66 – Nominee Representatives and Transparency Requirements

Article 66 addresses the obligations of nominee representatives. Nominee representatives are persons who formally represent a legal entity but in practice act on behalf of another person. Such situations may be used to conceal the actual control over a legal entity and the identity of the beneficial owners.

Against this background, Article 66 provides that nominee shareholders and nominee directors of a legal entity must collect and retain information on the identity of the person who nominated them. This also includes information on the beneficial owners of the nominating person. The provision means that nominee representatives must obtain adequate, accurate and current information on these persons. This information, and its status, must also be kept available to the legal entity.

The legal entity, in turn, is obliged to report the information to the central registers. In addition, legal entities must also provide the information to obliged entities when those entities conduct customer due diligence measures under Chapter III of the AMLR.

This provision creates further transparency around legal structures in which nominee representatives are used. It is intended to ensure that such arrangements cannot be used to conceal the actual control over a legal entity and that obliged entities and authorities have access to information on the persons who are in fact the beneficial owners.

Article 67 – Foreign Legal Entities and Legal Arrangements

Article 67 addresses a particularly important issue in the AMLR’s transparency system, namely how the rules are to apply to legal entities and legal arrangements that are established or administered outside the European Union.

The provision sets out several situations in which foreign legal entities and legal arrangements must submit beneficial ownership information to a central register in a Member State. The entities or arrangements must submit beneficial ownership information in situations where they:

• establish business relationships with an obliged entity;
• acquire immovable property within the EU, either directly or through intermediaries;
• carry out occasional transactions, directly or through intermediaries, and purchase goods from actors covered by Article 3(3)(f) or (j), namely persons trading in high-value goods or persons trading in cultural objects and high-value goods, in relation to motor vehicles for private use with a value of at least EUR 250,000, or the equivalent in national currency, watercraft for private use with a value of at least EUR 7,500,000, or the equivalent in national currency, or aircraft for private use with a value of at least EUR 7,500,000, or the equivalent in national currency;
• are awarded contracts for goods or services, or are granted concessions, by a contracting authority within the EU.

Risk-Based Exemptions under Article 67

Article 67 also contains risk-based exemptions from the obligation to register information when a business relationship is established with an obliged entity. In such cases, foreign entities are required to submit their information only where:

• the business relationship with the obliged entity is linked to a medium or high risk of money laundering or terrorist financing, based on the risk assessment at Union or national level; or
• the category or sector in which the foreign legal entity operates can be linked to a medium or high risk of money laundering or terrorist financing, again based on the risk assessment at Union or national level.

The submitted information must include both a statement of the activities to which the information relates and all relevant documents.

When Must Information Be Submitted to Central Registers?

The provision also contains detailed rules on when beneficial ownership information must be submitted to the central registers:

• Where a foreign legal entity enters into a business relationship with an obliged entity, the information must be submitted before the business relationship begins.
• The information must be submitted before the purchase is completed where foreign legal entities acquire immovable property within the EU or acquire any of the high-value goods referred to above.
• Where the foreign legal entity has been awarded a public contract by a contracting authority within the EU, the information must be submitted before the parties sign the contract.

The Role of Obliged Entities in Relation to Foreign Legal Entities

Article 67 also regulates the role of obliged entities in the process. Where the parties enter into a business relationship, the obliged entities must inform foreign legal entities whether the conditions for an exemption are met. Obliged entities must then require a certificate proving registration or request an extract of the beneficial ownership information contained in the central register. These measures are a precondition for the business relationship or transaction to continue.

It is further provided that foreign legal entities must report changes to the beneficial ownership information without undue delay and no later than within 28 calendar days. The requirement applies throughout the period during which the connection to the Union remains. More specifically, the requirement to report changes to information applies:

• for as long as the business relationship with the obliged entity continues;
• for as long as the legal person or arrangement holds the immovable property;
• from the time when the information is first submitted to the central register until the acquisition has been completed; and
• throughout the full term of the contract.

Where the legal entity or arrangement meets the conditions for reporting beneficial ownership information in different Member States, a certificate of registration from one central register must be sufficient in other Member States as well.

Finally, the article also contains transitional provisions for certain situations in which foreign legal entities already own immovable property within the Union. In such cases, beneficial ownership information must be submitted to central registers within a specified time limit.

In summary, Article 67 is intended to ensure that foreign legal entities are also subject to beneficial ownership registration requirements where they have a sufficiently strong connection to the Union.

Article 68 – Sanctions as a Driver of Compliance

Article 68 provides that infringements of the provisions in Chapter IV on transparency in relation to beneficial ownership must be met with sanctions that are effective, proportionate and dissuasive. It is the responsibility of the Member States to establish these sanctions and ensure that they are applied in practice. By 10 January 2025, Member States must have notified the rules on sanctions to the Commission. The notification by the Member States must also include the legal basis for those rules.

The Commission must then, in accordance with Article 85 on the exercise of the delegation, adopt delegated acts to supplement the AMLR by determining the following:

• which categories of infringements are to be sanctioned and which persons are responsible for the infringements;
• how the seriousness of sanctioned infringements is to be assessed; and
• which criteria are to be taken into account when determining the level of sanctions.

Article 68 is a central provision from a compliance perspective. Companies need processes for continuously updating their internal rules and procedures. Sanctions do not function solely as a criminal law tool, but also as a driver to ensure that the provisions are actually complied with in practice.

Transparency in an International Context

The articles show how the AMLR addresses complex situations in a global economic system. The framework covers not only legal entities established within the Union, but also extends to entities and arrangements outside the Union where their activities have a connection to the EU market.

Through provisions on exemptions, transparency around nominee representatives and registration requirements for foreign legal entities, a more comprehensive system is created for the identification of beneficial ownership. Taken together, the principal objective is to ensure that legal structures cannot be used to conceal control or ownership relationships and that obliged entities and authorities have access to the information required to counter money laundering and terrorist financing effectively.

For businesses subject to the AMLR, this means that work on beneficial ownership is not merely a matter of identifying owners within their own jurisdiction. Increasingly, it requires an understanding of international structures, nominee arrangements and the specific rules that apply to foreign legal entities. Transparency around beneficial ownership therefore becomes a central part of a business’s overall work on compliance and risk management.

Against this background, the management of beneficial ownership is becoming increasingly complex, particularly in structures with international elements or the use of nominee arrangements. At Morling Consulting, our AML lawyers regularly support companies in analysing complex ownership structures, identifying beneficial owners and assessing risks in customer relationships. This work also includes designing and implementing effective customer due diligence processes, including the handling of foreign legal entities and cross-border structures, so that the business meets the AMLR’s requirements in practice.