Regulation (EU) 2024/1624 (the “AMLR”) applies from 10 July 2027, and contrary to popular belief, there will be significant impact for Luxembourg professionals.
Entities’ beneficial owners may change, as the concept of beneficial ownership was refined to enhance transparency and provide a clearer framework to identify the individuals who ultimately own or control legal entities and arrangements.
Here are four developments that professionals should keep in mind.
Parallel control assessment is clarified as the rule
The current framework describes a cascading identification process for BOs.
It already requires professionals to look for additional beneficial owners after identifying a qualifying individual shareholder, and already recognises situations requiring simultaneous ownership and control assessments.
But AMLR makes the requirement explicit: control via other means must be identified independently of, and in parallel with, ownership interest or control through ownership interest.
Threshold is now exactly 25%
Current ownership threshold is more than 25%.
AMLR new threshold (article 52) is 25% or more
For an ordinary corporate entity with 4 individuals each holding exactly 25%, they now all qualify as BO through ownership.
Looking at the owner of the controlling parent
John owns 30% of HoldingCo, which owns 60% of CustomerCo.
We assume ordinary shares with proportional voting rights, and no specific arrangements.
John’s ownership interest is 30% of 60% = 18%. So, in the current framework, he would not qualify through ownership.
In the new framework, article 54(b) of AMLR, he qualifies as BO: his 30% is an ownership interest in HoldingCo, which controls CustomerCo.
The Senior Managing Officials fallback change
Current framework: after applying the cascading logic ownership interest –> control through other means, if no individual was identified, then the senior managing officials were identified as BOs.
New framework: after applying ownership interest and control check in parallel and independently, if no BO is identified, or doubts remain about those identified, then obliged entities:
- record that no BO was identified
- identify all the natural persons holding the positions of senior managing officials in the legal entity and verify their identity.
- record the identification actions taken and difficulties encountered.
Those officials are identified in their management capacity, and the fallback does not make them beneficial owners.
Regulation (EU) 2024/1624 (the “AMLR”) applies from 10 July 2027, and contrary to popular belief, there will be significant impact for Luxembourg professionals.
Entities’ beneficial owners may change, as the concept of beneficial ownership was refined to enhance transparency and provide a clearer framework to identify the individuals who ultimately own or control legal entities and arrangements.
Here are four developments that professionals should keep in mind.
Parallel control assessment is clarified as the rule
The current framework describes a cascading identification process for BOs.
It already requires professionals to look for additional beneficial owners after identifying a qualifying individual shareholder, and already recognises situations requiring simultaneous ownership and control assessments.
But AMLR makes the requirement explicit: control via other means must be identified independently of, and in parallel with, ownership interest or control through ownership interest.
Threshold is now exactly 25%
Current ownership threshold is more than 25%.
AMLR new threshold (article 52) is 25% or more
For an ordinary corporate entity with 4 individuals each holding exactly 25%, they now all qualify as BO through ownership.
Looking at the owner of the controlling parent
John owns 30% of HoldingCo, which owns 60% of CustomerCo.
We assume ordinary shares with proportional voting rights, and no specific arrangements.
John’s ownership interest is 30% of 60% = 18%. So, in the current framework, he would not qualify through ownership.
In the new framework, article 54(b) of AMLR, he qualifies as BO: his 30% is an ownership interest in HoldingCo, which controls CustomerCo.
The Senior Managing Officials fallback change
Current framework: after applying the cascading logic ownership interest –> control through other means, if no individual was identified, then the senior managing officials were identified as BOs.
New framework: after applying ownership interest and control check in parallel and independently, if no BO is identified, or doubts remain about those identified, then obliged entities:
- record that no BO was identified
- identify all the natural persons holding the positions of senior managing officials in the legal entity and verify their identity.
- record the identification actions taken and difficulties encountered.
Those officials are identified in their management capacity, and the fallback does not make them beneficial owners.
