Polish Central Register of Ultimate Beneficial Owners (CRBR) – transparency above all

On 13 July 2018, the Act on counteracting money laundering and terrorism financing of 1 March 2018 came into force in Poland (Journal of Laws of 2018, item 723, as amended, hereinafter referred to as the "Act"). The purpose of this regulation was the full and correct implementation into the Polish legal system of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for money laundering or terrorist financing. Some of the provisions of the Act entered into force only 18 months after its announcement, i.e. on 13 October 2019, and significantly influenced the functioning of many enterprises.

REMEMBER! 
A qualified electronic signature is necessary! The Central Register of Ultimate Beneficial Owners was created in the form of an IT system, so each information submission is made via this system and requires signing with a qualified electronic signature in accordance with the representation model of the obliged entity disclosed in the National Court Register of entrepreneurs.

The changes introduced by the Act, and more specifically, the creation of the Polish Ultimate Beneficial Owner (UBO) register (hereinafter referred to as CRBR), were and are extremely important from the point of view of the everyday functioning of Polish entrepreneurs. The register brings both benefits and certain demandingness.

A lot has changed since 13 October 2019. Not only from the perspective of applicable regulations, but also in terms of the operation of the Register itself, which is still subject to constant updates and improvements.

Currently, all commercial law companies (except public companies), European Economic Interest Groups, European companies, cooperatives, European Cooperative Societies, associations subject to entry in the National Court Register and foundations (hereinafter "obligated entities") are obliged to register their data and report their actual beneficiaries in the CRBR Register within the deadline specified by law. 

These are the most important issues related to the operation of the Register.

Central Register of Ultimate Beneficial Owners – practical application

The purpose of creating the Central Register of Ultimate Beneficial Owners was to increase the security of economic transactions, the ability to check contractors, facilitate the verification of the structures of legal persons and the collection and processing of information about the ultimate beneficial owners of commercial law companies. From 13 October 2019, anyone interested can download data on the ultimate beneficial owners of their contractors from the Register free of charge - and thus find out who is really behind a given entity.

Ultimate beneficial owner – who is that?

In accordance with the general definition indicated in Art. 2 section 2 (1) of the Act, the ultimate beneficial owner is a natural person or natural persons who directly or indirectly exercise control over the client (entity) through their powers resulting from legal or factual circumstances, enabling them to exert decisive influence on the activities or actions undertaken by the client or natural person or natural persons on whose behalf business relations are established or an occasional transaction is carried out.

When identifying the ultimate beneficial owner, we always look for a natural person at the head of the capital structure of a given group, who has direct or indirect decisive influence on the obligated entity. This is often not an easy task, especially in multinational entities with complex capital structures. The legislator therefore offers us more detailed definitions which, in principle, are intended to enable us to search until we find the right natural person.

In the case of a client who is a legal person other than a company whose securities are admitted to trading on a regulated market subject to disclosure requirements arising from the provisions of European Union law or the corresponding provisions of the law of a third country, the ultimate beneficial owner is in particular considered to be:

• a natural person who is a shareholder or shareholder of the client who has the right to ownership of more than 25% of the total number of shares or stocks of this legal person;
• a natural person holding more than 25% of the total number of votes in the client's decision-making body, also as a pledgee or usufructuary, or on the basis of agreements with other persons entitled to vote;
• a natural person exercising control over a legal person or legal persons who jointly have the ownership right to more than 25% of the total number of shares or stocks of the client, or jointly holding more than 25% of the total number of votes in the client's body, also as a pledgee or usufructuary, or on the basis of agreements with others entitled to vote;
• a natural person exercising control over the client by having the rights in relation to this legal person referred to in Art. 3 section 1 (37) of the Act of 29 September 1994 on Accounting (Journal of Laws of 2019, item 351) [this concerns the rights of the parent entity exercising control over the subsidiary] or
• a natural person holding a senior management position in the event of documented inability to determine or doubts as to the identity of the natural persons referred to in the first, second, third and fourth indents and in the event of no suspicion of money laundering or terrorist financing.

In the case of a trust, the ultimate beneficial owner is:

• a founder, including a funder within the meaning of the Family Foundation Act,
• a trustee, including a member of the management board within the meaning of the Family Foundation Act,
• a supervisor, if appointed, including a member of the supervisory board within the meaning of the Family Foundation Act,
• a beneficiary, including a beneficiary within the meaning of the Family Foundation Act or - if the natural persons benefiting from a given trust have not yet been determined - a group of persons in whose main interest the trust was established or operates,
• another person exercising control over the trust,
• another natural person with rights or obligations equivalent to those set out in the first to fifth indents.

In the case of a natural person running a business activity in respect of whom there are no indications or circumstances that may indicate that another natural person or natural persons exercise control over it, it is assumed that such a natural person is also the ultimate beneficial owner.

We have rights, but of course we also have responsibilities

Verification of the contractor's data in the Register means that each contractor (i.e. the entrepreneur) must report the changes in question to the Register.

Who files it?

Pursuant to Art. 58 of the Act, the following entities are obliged to report information on ultimate beneficial owners and update data already included in the Register:

• general partnerships;
• limited partnerships;
• limited joint-stock partnerships;
• limited liability companies;
• simple joint-stock companies;
• joint-stock companies, with the exception of public companies within the meaning of the Act on public offering and conditions governing the introduction of financial instruments to organised trading and on public companies;
• trusts whose trustees or persons holding equivalent positions:
  • have their place of residence or registered office in the territory of the Republic of Poland or
  • establish business relations or purchase real estate in the territory of the Republic of Poland on behalf of or for the benefit of a trust;
•  partnerships;
• European Economic Interest Groups;
• European companies;
• cooperatives;
• European Cooperative Societies;
• associations subject to entry in the National Court Register;
• foundations.

What does it consist of?

The scope of information subject to reporting includes:

1. identification data of entities under Art. 58 of the Act:

• company name or, in the case of a trust, other data allowing the trust to be identified,
• organizational form,
• the registered office or, in the case of a trust, the residence or registered office of the trustee of the trust or of a person holding an equivalent position,
• number in the National Court Register or, in the case of a trust, the name of the relevant register together with the number, if it has been entered in the register,
• Tax Identification Number.

2. identification data of the ultimate beneficial owner of entities under Art. 58 of the Act, except for trusts:

• first name and last name,
• any citizenship you have,
• country of residence,
• PESEL number or date of birth - in the case of people who do not have a PESEL number,
• information about the size and nature of the share or rights of the beneficial owner.

3. identification details of the ultimate beneficial owner of the trust:

• first name and last name,
• any citizenship you have,
• country of residence,
• PESEL number or date of birth - in the case of people who do not have a PESEL number,
• information about the rights of the ultimate beneficial owner,
• in the case referred to in Art. 2 section 2 (1b), fourth indent, information about the group of persons in whose main interest the trust was established or operates.

Who is responsible for reporting the ultimate beneficial owner to CRBR?

The notification is made by the person or persons authorised to represent the obligated entity in accordance with the method of representation disclosed in the National Court Register, including the company's proxy. Unfortunately, currently CRBR still does not allow the possibility of submitting an application by an individually appointed representative for this purpose.

When submitting the notification, the authorized person also provides his/her data in the form of:

• first name and last name;
• citizenship;
• country of residence;
• PESEL number or date of birth - in the case of people who do not have a PESEL number;
• function authorising you to submit a notification.

The application, or in fact the notification of information about the ultimate beneficial owners, is generated by the Central Register of Ultimate Beneficial Owners after entering the Register's website and clicking on the "Create application" tab. Before the System generates a notification, we must provide the entity's Tax Identification Number, organisational form and the date of the event affecting the registration or updating of already registered data. Then, a request is created and you can complete an interactive online form. This Register indicates the fields that must be completed, depending on the scope of the information previously provided.  

Applications are submitted in the form of an electronic document, in accordance with the template provided by the Minister of Finance, and then affixed with a qualified electronic signature or ePUAP trusted profile and submitted via the dedicated CRBR website published (made available) by the Ministry of Finance. Therefore, in order to fulfill the obligation, you must have a web browser installed and an Internet connection. 

Reporting information on ultimate beneficial owners consists of the following steps:

• displaying the website of the Ministry of Finance (https://crbr.podatki.gov.pl/adcrbr/#/),
• providing the entity's identification data as described above,
• selecting the reporting date; the reporting date should be the same as the date of the event affecting the company's registration in the CRBR or updating the data already included in the Register that has changed,
• providing details of the company's ultimate beneficial owner,
• providing the details of the person making the report (the so-called entity's representative),
• marking the liability clause,
• exporting the completed application,
• electronic signing and loading of the application in the CRBR Register.

Deadlines for submitting data to CRBR are unequal for everyone – what was it like chronologically?

Entities already entered in the National Court Register are in a privileged position in terms of deadlines for submitting applications to the CRBR. The deadline for submitting identification data of companies and data of the ultimate beneficial owners in relation to commercial law companies registered in the National Court Register before the date of entry into force of these provisions of the Act – i.e. before 13 October 2019 – was 6 months from that date, i.e. the company had until 13 April 2020 to register in the Register.

However, due to the outbreak of the COVID-19 pandemic, the deadline for submitting information about the ultimate beneficial owner has been extended from 6 months to 9 months – i.e. until 13 July 2020. Therefore, all commercial law companies (except partnerships and public companies) registered in National Court Register before 13 October 2019, had time to fulfill the statutory obligation until 13 July 2020. 

Partnerships, European Economic Interest Groups, European companies, cooperatives, European Cooperative Societies, associations subject to entry in the National Court Register, foundations and trusts registered in the Register of Entrepreneurs of the National Court Register before 31 October 2021, but not yet registered in the CRBR Register, had their deadline for submitting the first application information on ultimate beneficial owners until 31 January 2022.

Obliged entities registered in the National Court Register in the period from 13 October 2019 to 9 November 2022 were bound by a deadline of 7 business days to report information on ultimate beneficial owners in the CRBR Register. 

As it turned out, during the operation of the Register, the deadlines for registering and updating data were too short for entrepreneurs to meet them in practice.

Therefore, in order to meet the expectations of entrepreneurs, the Legislator extended the deadline for registering ultimate beneficial owners from 7 to 14 business days by the Act of 7 October 2022 amending certain acts in order to simplify administrative procedures for citizens and entrepreneurs, amending, among others, provisions of the Act on counteracting money laundering and counteracting terrorism, which entered into force on 10 November 2022. 

Under the Act, companies that have already registered in the Register will also be obliged to update the declared data in the event of any change within 14 business days from the date of the change.

Carrot and whip. What are the sanctions for failing to report the ultimate beneficial owner?

Both submitting an application for entry into the Register and obtaining data from it are free of charge. However, apart from the carrot in the form of benefits arising from the transparency and openness of contractors' corporate structures, there is also a whip hanging over the company's management boards. The sanction for submitting information required by the Act to the CRBR after the deadline is a fine of up to PLN 1 million.

An application to the Register is submitted under penalty of criminal liability for submitting a false declaration. Therefore, all data provided in the Register must be consistent with the current factual and legal status.

It is also worth noting the change introduced to the Act on 31 October 2021. From now on, the ultimate beneficial owner is obliged to provide the obligated entity with all information and documents that will be necessary to report or update data already reported in the CRBR Register.

An ultimate beneficial owner who fails to fulfill this obligation (and, consequently, the obligated entity does not report or update the data within the prescribed period or provides information that is inconsistent with the facts) is subject to a fine of up to PLN 50,000.

CRBR and sensitive data

In its judgment of 22 November 2022, the Court of Justice of the European Union (hereinafter referred to as the "CJEU") stated that Art. 30 section 5, first paragraph (c) of the Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing is invalid. What does this mean in practice?

The above provision assumes that EU Member States are obliged to ensure general access to information about the ultimate beneficial owners of corporate entities and other legal entities established in their territory. However, according to the CJEU, universal access to such information interferes with the fundamental right to respect for private life, which is guaranteed by Art. 7 and 8 of the Charter of Fundamental Rights of the European Union.

If access is common, public and free, then the risk of misuse of sensitive data of ultimate beneficial owners disclosed for the purposes of counteracting money laundering and terrorist financing, their dissemination, improper use for illegal purposes, or further storage in the sense of not only verification, but also business, is very high.

For the above reasons, the CJEU also found that the provision of Art. 30 section 5, first paragraph, (c) is inconsistent with the provisions of the GDPR.

Will the CJEU judgment affect the functioning of the CRBR Register? This is highly probable, but at the moment the Polish legislator has not taken any action that would limit access to information collected in CRBR. Following the actions taken by other member states, perhaps in the near future the use of the Register will be limited only to persons or entities that demonstrate a justified legal interest in obtaining it.

The Sixth AML Directive (AML6) – what further changes does the future bring? 

The European Union is working dynamically on the adoption of another directive on counteracting money laundering and terrorist financing – the so-called 6th AML Directive. Interinstitutional negotiations are currently ongoing. In the next step, the European Union Parliament will express its position on this matter. 

The work is still in progress. It is not entirely clear when we will be able to see their final effect. However, we already know what changes are likely to await us.

On 28 March 2023, Members of the European Parliament from the Committee on Economic and Monetary Affairs and Civil Liberties, Justice and Home Affairs, adopted their position on three draft legal acts regarding the rules for financing the EU anti-money laundering and counteracting the financing of terrorism (AML/CFT) policy – including, among others, the 6th AML Directive. The changes are as follows:

Central registers of ultimate beneficial owners 

Member States' central registers of ultimate beneficial owners are to be available digitally in an official EU language and in English. The entity responsible for maintaining the register will have the right to request from legal persons any information necessary to identify and verify their ultimate beneficial owners. This information in its current version must be available to FIUs, AMLA, competent authorities, self-regulatory bodies and obliged entities.

Lack of sufficient data and their inaccuracy during the registration process may result in sanctions being imposed. It is also envisaged that entities responsible for central registers should be able to verify the information included in the register using appropriate technology. 

The CJEU judgment and access to registers 

Returning to the CJEU judgment that we wrote about above, MEPs decided that automatic two-and-a-half-year access to the registers of ultimate beneficial owners (as well as to the combined central registers) will be granted to persons with a legitimate interest, including journalists, social organizations, and higher education institutions. 

The assumption is that Member States will automatically renew, withdraw or suspend access to registers in the event of misuse.

Reduced percentage threshold for identifying ultimate beneficial owners

According to the position proposed by MEPs, the ultimate beneficial owners are to be identified by owning 15% of shares, voting rights or other direct or indirect ownership interest. 

The percentage threshold for identifying ultimate beneficial owners would be even lower, namely 5%, in the case of entities exposed to a higher risk of money laundering or terrorist financing.

Collecting information about luxury goods 

The assumption of the position adopted by Members of the European Parliament in order to counteract money laundering and terrorism financing is also the desire by Member States to collect information on the ownership of goods such as yachts, planes and cars worth over EUR 200,000 and goods stored in free trade zones.

The planned changes are really far-reaching and may change a lot in the functioning of the Register itself and in the identification of the ultimate beneficial owner, which, at least at first glance, may seem simpler. The fact that more and more actions are taken to fully protect the risk of money laundering and terrorism financing affects the general public awareness of this matter. 

Currently, however, registering an ultimate beneficial owner in CRBR may keep many people awake at night. This is another obligation on the Legislator's list that must be fulfilled by an ordinary citizen who is less and less an entrepreneur and more and more an expert in the field of commercial law. However, we believe that our article has shed some light on the topic and will be helpful in fulfilling this obligation.

Should you have any questions or wish to discuss the topic, do not hesitate to contact us.