Obligation for initial registration, obligation to control, annotations

Obligation for initial registration and obligation to control

Since the Austrian UBO register represents implementation of the 4th EU Money Laundering Directive and is intended to contribute to the prevention of terrorist financing and money laundering, it is necessary to record changes in beneficial ownership in the register in a timely manner. Accordingly, the legislator has not only imposed the obligation to register on the individual legal entities their existing beneficial owners once before June, 1st 2018 (prolonged until August, 15th), but also to subsequently announce changes to the beneficial owners within four weeks of becoming aware of the change.

Furthermore, every legal entity has the obligation to check at least once a year whether the data deposited in the register of beneficial owners are still in accordance with the actual ownership structure and ensure that any changes are also recorded in the register accordingly. In addition, adequate documentation must be provided to establish ultimate beneficial ownership: copies of the documents and information required to perform this annual due diligence must be kept for at least five years after the end of beneficial ownership of the natural person.

In order to ensure the timeliness and thus the practical use of the Register of beneficial owners, the WiEReG provides for fines of a serious amount in the case of intentional or grossly negligent misrepresentation in registration of the ultimate beneficial owner of a legal entity: An intentional false report is punishable with a fine of up to EUR 200,000 , while a grossly negligent false report is punishable with a fine of up to EUR 100,000. If the declaration of the ultimate beneficial owner of a legal entity is not or not fully revealed, the tax authority can enforce this by imposing a penalty.

Annotations

Annotations are warnings placed in the register of ultimate beneficial owners that the actual economic ownership is different from the registered economic ownership. Annotations may be made by professional service providers (such as notaries, lawyers, accountants, etc.) or by an authority.

Annotations by professional service providers

If, in the exercise of due diligence obligations, a professional service provider observes that a customer has registered a different beneficial owner than he has identified by his due diligence obligations and if he is convinced that the entry in the UBO register is incorrect or incomplete, he may notify the registry office electronically that the registered beneficial owner could not be verified. This process is called in official jargon "setting an annotation".

Subsequently the Authority will note that the registration could not be verified and the legal entity will become notified of the annotation in the UBO register without disclosing of the author of the annotation. The annotation indicates that obliged entities, when determining and verifying the identity of the beneficial owner, may no longer use the information from an extended extract as the sole basis and instead have to take additional appropriate measures, so that they are convinced to know who the beneficial owner is , However, a classification of the customer in a higher risk category is not necessary on the sole ground of an annotation.

The entity concerned may, after being notified by the Authority about setting of an endorsement, re-notify its beneficial owner, with the result that the original statement will only be stored as the historical data. The service provider who has set the annotation about the possibly incorrect register entry is then informed of the new entry.

Annotations and register entries by the Authority

Also the Register Authority may set an annotation in case it is believed that the register entry of an entity is incorrect. The affected entity will then be notified of the annotation via the corporate service portal (“Unternehmensserviceportal” (www.usp.gv.at)) and may re-register its ultimate beneficial owner, after which the annotations will only be kept under the historical records. An official annotation also denies professional services providers to use the information of an extended register extract as the sole basis when determining and verifying the identity of beneficial owners.