• Who is the beneficial owner?

Pursuant to Section 4 (4) of the AML Act, a beneficial owner is the natural person who has, de facto or de jure, the possibility to directly or indirectly exercise control over a legal entity, trust fund or another legal organisation without legal personality. The beneficial owner is always a specific natural person. The AML Act also states which facts may indicate the beneficial owner. However, the meeting of these criteria does not necessarily have to mean that the person is the beneficial owner. It is always necessary to assess whether this person has the possibility to exercise control.

Companies are obliged to identify their beneficial owner and record current data to discover and verify the identity of the beneficial owner including information about the fact that serves as a basis for being in the position of beneficial owner or another justification why this person is considered to be the beneficial owner.

• Register of beneficial owner data

The register of beneficial owner data is a non-public register. Information about the beneficial owner is not provided together with a copy of the record in a public register and it is not disclosed. An extract from the beneficial owner data may be obtained by the recorded person. An extract from the beneficial owner register in a limited scope may be obtained by a person who proves interest in terms of preventing criminal acts of handling stolen goods, money laundering, their source criminal acts, and the criminal act of a terrorist attack.

Remote access to the register will be available for courts, law enforcement authorities, tax authorities, the Financial Analytics Office, the Czech National Bank and other state authorities. Remote access will also be available to obliged entities as per the AML Act that will be able to use the data recorded in the register of beneficial owner data as part of customer identification and due diligence.

• Record in the register of beneficial owner data

Legal entities recorded in the Commercial Register must record their beneficial owner in the register by 1 January 2019. Other entities obliged to record their beneficial owner in the register must meet this obligation by 1 January 2021.

The following information about the beneficial owner is recorded in the register:

1. Name and address of permanent residence (as well as temporary residence if applicable);
2. Date of birth and personal number, if assigned;
3. Nationality; and
4. Information about the fact that serves as a basis for being in the position of beneficial owner.

Information about the fact that serves as a basis for being in the position of beneficial owner is supported by the relevant documents. Such a document may be, for example, an extract from a record in a public register or foundation documents.

The record in the register of beneficial owner data is not subject to a fee until 1 January 2019; after this date the fee will amount to CZK 1,000.

• What are the consequences of the failure to record the beneficial owner in the register?

Legal regulations do not set a direct sanction for the failure to comply with the obligation to record data on the beneficial owner in the beneficial owner register, but such a conduct may have a negative impact on the company’s business activities. The failure to record the beneficial owner in the register may lead to the impossibility to participate in public tenders or to obtain a grant from EU funds, and make obtaining bank financing more difficult.

Based on the announcement published on the website of the Ministry of Industry and Trade, the management body of the Operational Programme Enterprise and Innovation for Competitiveness anticipates that calls announced from June 2018 will include a condition that the applicant for a programme grant cannot be an entity whose beneficial owners are not recorded in the register of beneficial owner data as of the day of filing the application.

The article is part of dReport – June 2018, Tax news; Grants and investment Incentives