November 4, 2019
Greece enacts provisions for registration of ultimate beneficial owners
Greece’s Law 4557/2018 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the Law), which entered into force on 30 July 2018 transposed European Union (EU) Directive 2015/849 into the Greek legislative framework. The Law provides the main structure for the introduction of the Registries, where ultimate beneficial owners (the UBOs) should be registered and the subject to penalties. Nevertheless, certain issues remained to be specified by the issuance of Ministerial Decisions.
Accordingly, two recent Decisions of the Minister of Finance (No. 67343 ΕΞ/19 June 2019 and 73900 ΕΞ/02 July 2019, hereinafter the MDs and respectively MD1 and MD2) were published in the Government Gazette, setting forth specific regulations as well as clarifications on specific matters of the Law, and in combination with the latter, has resulted in the UBO Registries acquiring full legal effect in Greece.
Matters that were specified by the MDs included, inter alia, the full list of persons required to register, the full details that should be reported and the deadlines for reporting.
Main provisions of Law 4557/2018
Definition of UBOs
The Law, in Art. 3.17, defines UBOs as “the natural person(s) who ultimately own the company or control the company by holding or controlling directly or indirectly a sufficient percentage of its shares or voting rights or other ownership rights, including inter alia through bearer shares or other means.”
Holding a percentage of voting rights or ownership rights above 25% by a natural person is an indication of direct control. Holding a percentage of voting rights or ownership rights above 25% of a company by another company, whose control is exercised by natural person(s) or by multiple companies controlled by the same natural person(s), is an indication of indirect control. The control can be verified based on the prerequisites of paras 2 to 5 art 32 L 4308/2014 (Greek GAAP).
Types of Registries
The Law in Art. 20 and 21 provides for three types of Beneficial Ownership Registries where UBOs should be registered:
Penalties for non-compliance
Persons or entities required to report should register all relevant information with the Central Registry by the deadlines provided for below (under III.D).
In the case of non-compliance, Art. 20 paras 8 and 9 of the Law, provides that tax authorities have the right to refuse the issuance of a tax clearance certificate for the subject legal entity and may impose a fine of €10,000 and a new deadline for compliance with the UBO provisions. If said deadline is not met the fine shall be doubled.
Specifications introduced by the MDs
Entities required to register
Following the above, the issued MDs specify the persons required to register their UBOs in the Central Registry as follows:
Provision of information
According to Art 3 and 4 of MD1, legal persons and entities have access to the Central Registry through their authorized representatives. Said representative should be a natural person, with an active key-code number (kleidarithmos), registered in the online portal of the tax authorities (taxisnet) by the legal representative of the legal entity. The authorized representative is liable for the accuracy and completeness of the following information:
Access to the Registry
According to Art 6 of MD1, the Central Registry can be accessed by several competent authorities i.e., the Anti-Money Laundering, Counter-Terrorist Financing and Source of Funds Investigation Authority, prosecuting authorities or other authorities with investigative or controlling powers as well as the people required to disclose their information.
The Anti-Money Laundering, Counter-Terrorist Financing and Source of Funds Investigation Authority in particular has full and unlimited rights to access the registered information. As for all other authorities and persons required to report, they have limited access to such information and only for due diligence purposes.
All registered data must be kept online for five years.
Persons required to report should pay an annual fee of €100 to access the Registry.
Natural persons should pay €20 to access the Registry and are allowed to make 10 searches. The collection of said fees is made electronically.
Deadlines for Notification in the Registry
Notification in the Registry started in September 2019.
Obliged entities are divided in 3 Groups (A, B or C) as per the MD1 with regard to the time when they will be allowed access to the Central Registry and make the relevant notifications.
By virtue of an amendment decision to the Ministerial decision issued in June 2019, signed on 31 October 2019 by the Minister of Finance, the deadlines for registration to the Central Registry were extended as follows:
Law 4557/2018, along with the subsequently issued MDs, constitutes a significant breakthrough to the Anti-Money Laundering (AML) legislation, since it introduces an updated and organized regulatory framework through transposition and implementation of the relevant EU directive 2015/849. The adaptation of the provisions to the Greek reality by the establishment of different types of UBO Registries and specification of their operation, reinforces the cooperation and the exchange of information between the competent authorities and operates beneficially for the transparency of transactions.
For additional information with respect to this Alert, please contact the following:
Platis – Anastassiadis & Associates Law Partnership, Athens