Due to the requirements of the 5th European Money Laundering Directive, it was necessary for Liechtenstein to adapt the previous rules on the UBO register (previously the Directory on Beneficial Owners, Verzeichnis der wirtschaftlichen Eigentümer). Pro memoria: under the previous law, only those persons who exercised control were entered in the register. In the case of foundations and trusts in particular, this meant that not all beneficial owners were listed in accordance with the Due Diligence Act – which will now be the case.
In addition, the rights of inspection were limited, especially with regard to foundations and trusts. The following is a brief summary of which persons, authorities or companies may inspect the register under which conditions.
In principle, the following parties have inspection rights:
a) domestic authorities (Art. 13 of the Act of 3 December 2020 on the Register of Beneficial Owners of Legal Entities, hereinafter “RBOA”);
b) foreign authorities (Art. 14 RBOA);
c) domestic and foreign financial institutions (Art. 15 RBOA);
d) domestic persons subject to due diligence (Art. 16 RBOA); and
e) third parties (Art. 17 RBOA).
For each of the above mentioned groups, different processes have been foreseen.
a) Disclosure of data to domestic authorities
Liechtenstein authorities may without limitation access the data on beneficial owners of legal entities, foundations and trusts by a so called “retrieval procedure”. They may request all data registered. The legal entities, foundations and trusts concerned may not and will not be informed.
According to Art. 13 of the respective Ordinance (RBOO), the retrieval procedure also includes “the possibility of finding legal entities or beneficial owners without restrictions by entering corresponding search criteria”. Thus, in my understanding, authorities for instance may search, whether John Doe is entered as beneficial owner anywhere in the UBO register with regard to any structure registered in Liechtenstein.
In this regard, please bear in mind, that it is the aim of the European Community – and thus regulated accordingly in the 5th AML guideline – to network the registers in each country (Art. 10 RBOA). Hence, in future, most likely a search on John Doe will be possible within all connected registers, i.e. all over Europe!
b) Disclosure of data to foreign authorities
In case of requests by foreign authorities, the respective local authorities will decided on the admissibility of the disclosure of date based on the procedures of the international administrative assistance and thus within the respective legal framework. The foreign authorities may request all data registered. If the requests are admissible they will provide the requesting foreign authority with the respective data. Also in this case, the legal entities, foundations and trusts concerned may not and will not be informed.
c) Disclosure of data to domestic and foreign financial institutions (such as banks)
Domestic banks as well as foreign banks (bank domiciled in another EEA member state or in a third state, if not only the requirements laid down in the EU AML guidelines but also the European data protection requirements are met) may request for an extract of the UBO register by, amongst others, providing a statement, that the data requested is required for fulfilling due diligence obligations or for carrying out duties in fighting money laundering, predicate offences to money laundering, and terrorist financing. They may request all data registered.
The legal entity, foundation or trust concerned ha not the position of a party in proceedings for the disclosure of the data and will only informed after the data has been disclosed.
d) Disclosure of data to domestic persons subject to due diligence (such as trust companies)
Domestic persons, subject to the due diligence law (for instance trust companies, insurance companies, etc.) may request for an extract of the UBO register by providing, amongst others, a statement, that the data requested is required for fulfilling due diligence obligations. Please note, that other than in case of banks only domestic and no foreign persons may apply for data to be disclosed.
According to the wording of the law, data can only be requested in these cases if the request is essential for the fulfilment of due diligence obligations, whereas banks can also make a request if the data serve to fulfil tasks in the fight against money laundering, predicate offences to money laundering and terrorist financing. According to the legislative materials (report and motion of the government to parliament; BuA 2020/075), however, no such difference was intended and there is probably a legal error.
Besides that, the main difference compared to banks is, that (other) persons subject to due diligence may only be provided with data on founder and protector, if those exercise control. In this regard, Art. 16 Sec. 3 regulates, that upon receipt of the respective application for disclosing the data (and thus before such data will be provided), the Office of Justice (hereinafter “Office”) shall obtain a declaration from the legal entity, foundation or trust concerned, whether a founder or protector exercises control. According to Art. 17 Sec. 1 RBOO, such declaration must be provided to the Office within three days (most likely business days, but this is not yet clear from the text in the ordinance). If the deadline expires unused, the Office shall disclose the data of the founders and/or protectors.
The legal entity, foundation or trust concerned has not the position of a party in proceedings for the disclosure of the data and will only informed after the data has been disclosed.
e) Disclosure of date to third parties
The procedure with regard to domestic or foreign third parties (natural or legal persons) is slightly different, as there is a distinction between stand-alone companies on the one hand and foundation, trusts and companies held by a foundation or a trust (i.e. cases, where not form C but form T has been used) on the other hand.
aa) stand-alone companies
In case of stand-alone companies, the requesting third party needs to provide a statements, that the data from the UBO register is required fighting money laundering, predicate offences to money laundering, and terrorist financing. The application shall be denied, if such statement “is not credible” (Art. 17 Sec. 3 Lit. b) RBOA). For the time being it is not clear, in which cases such statement will not be considered as “credible” and what the difference to the “legitimate interest” in case of foundations and trusts (see below) will be.
The legal entity concerned has not the position of a party in proceedings (reserved the statements mentioned above) for the disclosure of the data and will only informed about the disclosure (Art. 17 Sec. 13)
bb) Foundations, trusts and companies held by foundations or trusts
In case a form T has been used, i.e. in case of foundations, trusts and companies held by foundations or trusts,
- third parties have to state the intended use
- third parties have to prove the legitimate interest (which shall apply if it is plausibly demonstrated, that the requested data is used for fighting money laundering, predicate offences to money laundering, and terrorist financing [Art. 17 Sec. 6 RBOA]) or a controlling interest (which shall apply, if a foundation, trust or a company held by a foundation or a trust in turn holds more than 25% directly or indirectly in a legal person abroad);
- the data of non-controlling founders and protectors will not be disclosed (Art. 17 Sec. 4 RBOA); and
- it is not the Office deciding on the application but the VwbP Commission (“the Commission”), hence, the Office has to forward all statements and documents to the Commission for decision (Art. 17 Sec. 10 RBOA).
According to Art. 17 Sec. 8 RBOA after receipt of the application the Office shall obtain from the foundation, trust or the company held by a foundation or a trust a statement
- whether there is a legitimate interest or a controlling ownership; or
- whether a founder or protector exercises control.
According to Art. 17 Sec. 2 RBOO, such statement must be provided to the Office within five days (most likely business days, but this is not yet clear from the text in the ordinance). If the deadline expires unused, the Office shall forward the application and all relevant documents and statements to the Commission and it is assumed, that settlor and/or protector are exercising control on the respective legal entity. The Commission takes a legally binding decision (Art. 17 Sec. 12 RBOA). However, the legal entity concerned has not the position of a party in the respective proceedings (reserved the statements mentioned above) and will only informed afterwards about the disclosure (Art. 17 Sec. 13).
The Commission will deny the application, if, amongst others, “no sufficient intended use applies” (Art. 17 Sec. 11 lit. d) RBOA) or “there is no legitimate interest” (Art. 17 Sec. 11 lit. e) RBOA). For the time being it is not clear, in which cases the Commission considers that “there is no legitimate interest” resp. when the described intended use “is not sufficient”.
The procedures for disclosure thus range from a comprehensive request by the authorities to applications that have to be justified in detail followed by probably longer decisions by the corresponding commission. The central point in all cases, however, is that the participation of the structures concerned is clearly limited and they are not entitled to be parties. Whether this is compatible with data protection is an open question…