The transparency of beneficial ownership under the fourth anti-money laundering directive : what is the outcome?

Abstract

With the introduction of the Fourth Anti-Money Laundering Directive, the aim of which is to increase the fight against money laundering in the European Union, the European Commission has imposed a new requirement necessitating the implementation of a central register holding personal information of beneficial ownership of companies and trusts to be accessed by competent authorities, Financial Intelligence Units and those persons having a ‘legitimate interest’. Some consider this new requirement as being absurd and that the European Commission has gone too far this time, since the central register will be holding sensitive and personal information of individuals, exposing them to a number of risks. It also goes against investors’ legitimate expectations relating to confidentiality and anonymity, and possibly defeat the purpose of legitimate structures such as real discretionary trusts or foundations. Others consider it as the way forward to expose the real persons behind any entity and hence makes it easier to detect money laundering and terrorism financing. Therefore, this research project will firstly delve into the need for the creation of central registers that is, the prevention of anonymous or obscure company structures and illicit financial flows. Moreover, it will also analyse the current requirements imposed by the Directive, together with protections and exemptions afforded to individuals in relation to their information, while at the same time, observing the conflict that may arise between trying to balance the need to obtain and process information on the one hand, and the rights of beneficial owners and investors on the other. Finally, this research project will attempt to analyse the position being adopted in Malta and comparing same with what other jurisdictions are doing, while highlighting the importance of working together to ultimately achieve the aim of the Directive.