Expiry of the statutory transitional regime for discrepancy reports to the transparency register
All obligated parties under the Money Laundering Act [Geldwäschegesetz – GwG], namely financial and credit institutions, financial services companies, insurance companies, payment institutions, real estate agents, but also non-privileged dealers in goods, art brokers and art warehouse keepers are obliged to verify the information provided by their respective business partners on beneficial owners and to obtain an extract from the transparency register for this purpose (Section 12 (3) GwG). If there are discrepancies between the information on beneficial owners entered in the transparency register and the information available at the obligated parties, obligated parties must immediately report this to the transparency register pursuant to Section 23a (1) sentence 1 GwG.
In the course of the conversion of the transparency register from a supplementary register to a full register, the legal duty to submit a discrepancy report pursuant to Section 59 (10) GwG was suspended until 1 April 2023 if a report to the transparency register was dispensable under the legal situation applicable until 31 July 2021. According to the so-called reporting fiction in Section 20 (2) GwG, the obligation to report to the transparency register was deemed to be fulfilled if the information on the beneficial owner could already be obtained from the electronically retrievable commercial, partnership, cooperative, association or company register. Insofar as the reporting fiction did not apply, discrepancy reports had to be submitted up to now.
Such statutory transitional period ends on 01.04.2023. Starting on 02.04.2023, discrepancy reports must now be submitted in all cases. According to the FAQs of the Federal Office of Administration [Bundesverwaltungsamt] (in German language only), a discrepancy is deemed to exist if, among other things, discrepancies are found in the first or last name, date of birth, place of residence, but also in the type of beneficial ownership (e.g. participation in the company or exercise of a function on a governing body). A discrepancy is also said to exist if the company, contrary to its legal transparency obligation, has not declared the beneficial owner to the transparency register. Depending on the legal form, transitional periods – which expired on 31 December 2022 at the latest – applied for this.
No discrepancy report is required if not all nationalities of the beneficial owner are entered in the transparency register or there are discrepancies in titles and nobility predicates (Federal Office of Administration FAQs E6 and E7).
The discrepancy report must be submitted immediately, i.e. without undue delay, after the discrepancies have been identified, via the reporting portal on the homepage of the transparency register. A violation of this obligation may constitute an administrative offence pursuant to Section 56 (1) No. 65 GwG and is subject to a fine.
Obligated parties under the Money Laundering Act must therefore now ensure that they promptly report any new discrepancies that become known to the transparency register, starting on 2 April 2023.