Beneficial Ownership & Shareholders Transparency Prepared by Natalia Perestyuk,Managing Partner at Network PartnersMBA, Attorney at law

FATF goal (behind RQs on BO/ST)

Identity of known or suspected criminals

True purpose of an account or property held by a corporate vehicle

Source or use of funds or property associated with a corporate vehicle

Key Examples to Obscure BO/ST (1)

a) shell companies (which can be established with various forms of ownership structure), especially in cases where there is foreign ownership which is spread across jurisdictions

b) complex ownership and control structures involving many layers of shares registered in the name of other legal persons

c) bearer shares and bearer share warrants

d) unrestricted use of legal persons as directors

e) formal nominee shareholders and directors where the identity of the nominator is undisclosed

f) informal nominee shareholders and directors, such as close associates and family, and

g) trusts and other legal arrangements which enable a separation of legal ownership and beneficial ownership of assets

h) use of intermediaries in forming legal persons, including professional intermediaries

Key Examples to Obscure BO/S (2)

Effective AML/TF System Criteria

Basic information is available publicly.

Beneficial ownership information is available to competent authorities.

Persons who breach these measures are subject to effective, proportionate and dissuasive sanctions.

This results in legal persons and legal arrangements being unattractive for criminals to misuse for money laundering and terrorist financing

BO notion (Legal Person)

Beneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted.

It also includes those persons who exercise ultimate effective control over a legal person.

Reference to “ultimately owns or controls” and “ultimate effective control” refer to situations in which ownership/control is exercised through a chain of ownership or by means of control other than direct control.

R24: LP Transparency&BO

To prevent the misuse of legal persons for ML/TF.

To ensure there is adequate, accurate and timely information on the beneficial ownership and control of legal persons (including cases of bearer shares/warranties, nominal directors/shareholders) that can be obtained or accessed in a timely fashion by competent authorities.

To consider measures to facilitate access to beneficial ownership and control information by financial institutions (in line with R10 & R22)

BO notion (Legal Arrangement)

Natural person(s), at the end of the chain, who ultimately owns or controls the legal arrangement, including:

those persons who exercise ultimate effective control over the legal arrangement, and/or

the natural person(s) on whose behalf a transaction is being conducted

R25: LA Transparency&BO

To prevent the misuse of legal arrangements for ML/TF.

To ensure there is adequate, accurate and timely information on LA (including information on the settlor, trustee and beneficiaries of express trusts), that can be obtained or accessed in a timely fashion by competent authorities.

To consider measures to facilitate access to beneficial ownership and control information by financial institutions (in line with R10 & R22)

T2S Program Timelines

Migration to T2S: Key Dates

User testing (completed) stared in August 2014

Community testing 2nd of March 2015

First wave of migration 22nd of June 2015

Second wave 28th of March 2016

Third wave12th of September 2016

Final wave 6th of February 2017

4 Waves of Migration to T2S

First wave22 June 2015T2S Go Live

Second wave28 March 2016

Third wave12 September 2016

Fourth wave6 February 2017

Bank of Greece Securities Settlement

System (BOGS)

Euroclear Belgium Clearstream Banking (Germany)

Centrálny depozitár cenných papierov SR (CDCP) (Slovakia)

Depozitarul Central (Romania)

Euroclear France KELER (Hungary) Eesti Väärtpaberikeskus (Estonia)

Malta Stock Exchange Euroclear Nederland LuxCSD (Luxembourg) Euroclear Finland

Monte Titoli (Italy) Interbolsa (Portugal) Oesterreichische Kontrollbank (Austria)

Iberclear (Spain)

SIX SIS (Switzerland) National Bank of Belgium Securities Settlement

Systems (NBB-SSS)

VP Lux (Luxembourg) KDD - Centralna klirinško depotna družba (Slovenia)

VP Securities (Denmark)

Lietuvos centrinis vertybinių popierių depozitoriumas

(Lithuania)BNY Mellon CSD (Belgium)

LCD - Latvijas Centralais depozitarijs (Latvia)

Transparency regimes in EU

First layer/final layer holders of securities in CSDs

Account holders, end investors & shareholders

Stocks & Flows

EU Transparency* on Share Holdings

None info of holding:NL, BE (bearer securities)

DE (bearer securities owned by foreign investor)

Limited by 1st layer CSD records: AT, EE, ES, IE, MT, SI, UK

Issuers’ access: AT, DE, ES, EE, FI, SE, SI

*up to date country status change since 2011 to be clarified

EU Transparency* on Share Flows

No real-time data on flows available to the issuers: AT, BE, FR (bearer), HU, IT, LT, LV, NL, PL, PT, RO, SK

No inputs to maintain pre-AGM register: DK, NO, PL, RO

*up to date country status change since 2011 to be clarified