1 in 3 legal entities has not yet registered UBOs

The number of legal entities that have registered their ultimate beneficial owners (UBOs) as of October 1st is approaching 67.5 percent. This means that almost one in three entities has not yet done so, despite the deadline of March 27th of this year. This is evident from a letter from the Minister of Finance, Sigrid Kaag, to the House of Representatives.

Institutions required to report unusual transactions, such as civil-law notaries, are prohibited from entering into new business relationships with clients who lack UBO registration. Due to the longer processing times for UBO registration, a temporary regulation was announced in April. This allows business to be conducted with clients who can demonstrate that they have submitted UBO registration documents. This regulation has been extended until January 1, 2023.

Fines
Legal entities that have not yet registered their UBOs will first receive a letter with a deadline to submit their returns. Failure to comply may result in fines, for example. According to Kaag's letter, 4,393 entities had been contacted by October 1st. Of these, approximately half had submitted their returns. The Economic Enforcement Bureau will conduct risk-based enforcement against entities that have not yet done so.

No entry
An analysis of the group that has not yet submitted a declaration shows that the largest group consists of private limited companies (BVs), followed by foundations, general partnerships, and associations. Looking at sectors, the largest peak is seen among (financial) holding companies. The analysis also reveals that there are various reasons for not registering UBOs. Some entities feel little urgency, while others find the registration too complex. Concerns about privacy and some proceedings before the European Court of Justice also appear to play a role. The Minister will now consult with various umbrella organizations to encourage these groups to register.

UBO register trusts
As of November 1, trusts and similar legal entities are also required to register their UBOs. The UBO register for trusts was established for this purpose, which will operate alongside the existing UBO register. A transitional arrangement applies until February 1, 2023.