A beneficial owner is a person (group of persons) who is the actual controlling owner of a legal entity.
For service providers who have been appointed as company officers (directors or secretaries) to provide administrative services according to Article 4 of the Regulation of Administrative Services and Related Matters Law of 2012 and have lost contact with their client's Beneficial Owner(s), the Department of Registrar of Companies and Intellectual Property of the Ministry of Energy, Commerce and Industry notes the following:
1. Subject to the provisions of articles 60-66 of the Prevention and Suppression of Money Laundering Activities Law of 2007(hereinafter referred to as the Act), “obliged entities” (for the purpose of the Act) must apply due diligence and identification procedures when establishing a business relationship with the client, as well as in the process of their cooperation.
b. In particular, Article 61(1)(b) of the Law provides that customer identification and due diligence procedures include the identification of the beneficial owner as well as taking reasonable steps to verify his/her identity. The aim is for the obligated persons to ascertain that they know the client's beneficial owner(s) and to take reasonable steps to understand the client's ownership and management structure.
1. In addition, following Article 62(6) of the Law, customer identification procedures and due diligence requirements apply not only to all new customers but also, at specific periods, to existing customers, taking into account the category of risk and when, among other things, the obliged entity has a legal duty to contact the client within the relevant calendar year (for example, the obligation to update the information in the Register of Beneficiaries under Article 61A(10)(c)), to verify the necessary information relating to the beneficial owner(s)).
2. If the obliged person fails to comply with the Law's requirements of due diligence concerning a client, he must terminate business relations with him/her per the provisions of Article 62(4) of the Law.
e. As a result, the provision of administrative services offered to the client in accordance with Article 4 of the Regulation of Administrative Services and Related Matters Law of 2012 is terminated.
1. In addition, it is emphasised that, by the provisions of Article 61A(10)(f)(ii) of the Law, a person who willfully provides false, misleading or fraudulent information about the beneficial owners of his client (company or other legal entity) to the Registrar of Companies, charged with an offence and, if found guilty, liable to imprisonment for up to 1 year or a fine not exceeding €100,000, or both.
Based on the previous, in order to register and update information in the Register of Beneficial Owners under the provisions of the Companies Directive R.A.A 112/2021 (ΚΔΠ 112/2021), any obliged entity who has been appointed as an officer in the company and who cannot confirm, verify or identify its client or has lost contact with the client, may resign as an officer of the company by filing to the Registrar of Companies the relevant (HE4) form, thereby terminating the business relationship with this client, per the provisions of the Law.
Earlier, on May 25, 2021, the Department of Registrar of Companies and Intellectual Property of the Ministry of Energy, Commerce and Industry informed the business community that there would be NO penalties during the test launch period.
It was also reported that the imposition of fines and criminal liability would be applied during the implementation of the final stage of the Register's work, the exact date of which will be announced by the Department in due course. It was emphasised that any fines would not be imposed retroactively.
In addition, it was clarified that in cases where a company was struck-off, or it ceased to operate due to the completion of the liquidation process and accordingly was deleted from the Register of Companies, it is not required to enter the data into the Register of Beneficial Owners, and it will not entail the application of any penalties.
The Department of Registrar of Companies and Intellectual Property of the Ministry of Energy, Commerce and Industry has notified the business community that the Register of Beneficiaries will continue to operate in test mode after July 31, 2022, until the start of the final mode, which will be announced shortly.
For those companies or other legal entities that have not yet fulfilled their obligations to record their beneficial owners in the Register of Beneficial Owners, per the Companies Directive R.A.A 112/2021 (ΚΔΠ 112/2021), it is recommended to implement it as soon as possible.
Once the final regime is operational, section 11 of the Companies Directive will automatically apply, and penalties will be imposed on the company and its officers for failing to comply with their reporting obligations. In addition, the provisions of article 61A(10)(f)(i) of the Prevention and Suppression of Money Laundering Activities Law of 2007 make it a criminal offence to fail to disclose information about their beneficial owners, will also be implemented.
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