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Central Register of Ultimate Beneficial Owners – new obligations for businesses

2019-12-05

On October 13, 2019, pursuant to the Act on Counteracting Money Laundering and Financing of Terrorism (hereinafter referred to as CMLA), an ICT system was launched, called the Central Register of Ultimate Beneficial Owners (CRBR). By assumption, apart from the basic task, which is counteracting money laundering and financing of terrorism, its function is to ensure higher security in business transactions and facilitate verification of potential contractors.

Pursuant to the Act, information on UBOs must be provided by:

  • general partnerships,
  • limited partnerships,
  • partnerships limited by shares,
  • limited liability companies and
  • joint-stock companies, except public companies,

– within 7 working days of the date of entry into the National Court Register.

On the other hand, companies registered with the National Court Register before October 13, 2019, must submit their applications within six months of the date of launching the register - i.e. until April 13, 2020. Submitting relevant applications within the deadlines is of utmost importance, as failure to comply with the duty is punishable by up to PLN 1 million.

The basic and the most important questions surrounding the CRBR are: ‘who is actually the ultimate beneficial owner?’ and ‘how can we identify him?’.

Of assistance in this respect can be Art. 2 (2) (1) of the Act on Counteracting Money Laundering and Financing of Terrorism, which defines the ultimate beneficial owner as an individual or individuals:

  • exercising direct or indirect control over the company through their powers, which arise from legal or factual circumstances, enabling them to exercise decisive influence over the company's actions or activities, or
  • on behalf of whom business relationships are established or an occasional transaction is carried out.

And in the case of legal persons - a natural person:

  • being a shareholder in a company holding more than 25% of the total number of shares in that legal person,
  • holding more than 25% of the total number of votes in the company's governing body,
  • exercising control over a legal person or legal persons who jointly have the right to ownership of more than 25% of the total number of shares in the company, or jointly holding more than 25% of the total number of votes in the company’s governing body,
  • exercising control over the company by having powers specific to the parent entities referred to in the Accounting Act, or
  • holding a senior management position in the company’s bodies in the event of a documented inability to determine, or doubt as to, the identity of the natural persons referred to in the above paragraphs, and in the event of suspected money laundering or terrorist financing.

Thus, according to the above regulations – an ultimate beneficial owner will not always be the person sitting on the board or the main shareholder, and the apparently simple determination of the ultimate beneficial owner may in practise prove to be much more complicated.

Additional obstacles may also occur in the case of foreigners running companies in Poland, because pursuant Art. 61 CMLA only a person authorized to represent the company may submit the application, i.e. the person disclosed in the National Court Register as the person authorized to represent the company. Thus, company attorneys will not be entitled to submit information to CRBR. Due to the large number of entities, which will be affected by the problem, one may hope that the provisions will be amended and supplemented accordingly. However, one should not wait for the company to be registered until the last moment, but rather analyse at this stage the organizational structure of the entity and submit the notification – so as to avoid, in the event of complications, any delays or sanctions which are associated with them.

 

Natalia Szymocha, Tax Consultant, ATA Tax Sp. z o.o.

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