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18 March 2019 / article

New identification rules

Loyens & Loeff is, pursuant to the Dutch Act on the prevention of money laundering and financing of terrorism (hereinafter referred to as: Wwft), also in real estate transactions required to screen its clients.

Data Protection & Privacy Update - March 2018

This screening process includes, among other things, identifying the Ultimate Beneficial Owner (hereinafter referred to as: UBO). The UBO is the natural person who is the ultimate owner or who controls a client, or the natural person on whose behalf a transaction or activity is carried out. In 2018, this legislation was tightened further: if there is no UBO, Loyens & Loeff has to identify a pseudo-UBO of a legal person.

When identifying a (regular) UBO, there are two starting points: ownership and control. The direct or indirect holding of more than 25% of the shares, of the voting rights or the ownership interest in the company will be regarded as an indication that a natural person qualifies as UBO. If there are four shareholders of one company, there is, therefore, in principle no UBO. Previously, the client identification process with regard to the UBO stopped there. Since the tightening in 2018, simply ticking the box that there is no UBO is, however, no longer sufficient. Loyens & Loeff is obliged to find out in that case who the pseudo-UBO is. Senior management of the company is considered to be the pseudo-UBO. If there are multiple directors, this will, as a rule, be the chairman of the board of directors. When the director is another company, the natural person who is the director of such other company will be the pseudo-UBO, and so on. The pseudo-UBO must subsequently be identified.

In respect of the UBO or the pseudo-UBO, it must subsequently be clear whether he qualifies as a Politically Exposed Person (hereinafter referred to as: PEP). These are people who hold a prominent public position or who have held such a position less than one year ago. The UBO or the Pseudo-UBO also qualifies as a PEP if members of his immediate family or individuals with whom he has a close business relationship, hold a prominent public position.

To be able to carry out the above identification process, Loyens & Loeff will send an identification form and ask for certain documents. For a company, this form consists of the following components: (i) the authorisation of the contact person to represent the client; (ii) the declaration as to which natural person(s) qualify as UBO or Pseudo-UBO; and (iii) a PEP-statement. In addition, we always ask for a copy of a valid proof of identity of the UBO or Pseudo-UBO and the contact person of the client. We also ask for an organisation chart of the ownership and control structure of the client.