Prevention of money laundering: reporting requirements on the “real owner”

Spanish Royal Decree Nr. 304/2014, of 5 May, implements the law on prevention of money laundering and the financing of terrorism.

A preemptive approach

The Law has a preemptive approach that imposes reporting requirements on certain subjects, such as credit institutions, collective investment schemes, but also to certain professionals such as real estate developers, auditors, tax advisors, notaries, lawyers, etc.

Obligation to verify the “real owner”

Due diligence duties require verifying the identity of those seeking to carry out transactions equal to or exceeding 1,000 euros.

In this sense the concept of “real owner” is of the essence. It imposes the obligation to identify the actual individual who intends to perform the operation.

The real owner in the case of legal persons

In the case of legal persons, the law requires to identify the natural person(s) who actually own(s) or control(s), directly or indirectly, a percentage higher than 25% of the capital or voting rights of the legal person intending to carry out the operation.

Where there isn’t a natural person who has such control, it is deemed that the persons who exert it are the director or directors of the legal person.

To this end, managers of companies or other legal entities must obtain and maintain adequate, accurate and current information on the beneficial ownership thereof.

It is not compulsory to identify shareholders of listed companies or of its majority-owned subsidiaries, if and when these are subject to reporting requirements that ensure adequate transparency of its real ownership.

Mandatory checking before the operation

The identification and verification of the identity of the real owner must be made, in general, by a declaration of the customer or of the person having attributed the representation of the legal person.

Obligation not to establish the operation in case the real owner cannot be determined

One shall not establish or maintain business relationships with persons or legal persons whose structure of ownership and control has not been ascertained.

For more information, please contact us.

Picture: Don Dinero por David Lacarta bajo Licencia Creative Commons.

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