Transparency Register: De facto cancellation of implied notification by Bundesanzeiger?

Change in administrative practice regarding the reporting of additional forenames of beneficial owners

Since late 2020, Bundesanzeiger Verlag GmbH, the company which manages the German Transparency Register as a private law entity entrusted with the performance of sovereign tasks, has taken the view in proceedings on administrative offences and inconsistency notifications that, in addition to primarily used forenames, any additional forenames of beneficial owners should be reported to the Transparency Register, too. This is to apply irrespective of whether or not such additional names are linked to the primarily used forename by a hyphen. Reports containing only one of several names of a beneficial owner are inaccurate, according to Bundesanzeiger, and have to be corrected. This view lacks support in the relevant provisions of law. Sections 19(1) no. 1 and 20(1) sent. 1 of the German Anti-Money Laundering Act (Geldwäschegesetz – GwG) state that only the first name has to be reported to the Transparency Register. The list of questions and answers provided by the German Federal Office of Administration (Bundesverwaltungsamt – BVA) with respect to the Transparency Register, which were last updated on 9 February 2021 (“BVA FAQs 2021/I”, see our article of 25 February 2021), contain no information regarding a requirement to report additional forenames or any change in the administrative practice in this respect.

The effects of the change in the administrative view of Bundesanzeiger in practice are significant, as the obligation to report additional forenames of a beneficial owner to the Transparency Register can result in a de facto cancellation of the implied notification under section 20(2) German Anti-Money Laundering Act.

De facto cancellation of implied notification

Implied notification as described in section 20(2) German Anti-Money Laundering Act has the effect that the obligation to notify the Transparency Register is deemed met when all of the information referred to in section 19(1) no. 1 to 4 German Anti-Money Laundering Act (first name, family name, date of birth, place of residence and type and extent of economic interest) is evident from certain documents and entries which can be electronically retrieved from the registers referred to in section 20(2) sentence 1 German Anti-Money Laundering Act. Especially for a German limited liability company (GmbH), reporting beneficial owners to the Transparency Register will often be unnecessary as the list of shareholders usually contains all information regarding the beneficial owners.

If Bundesanzeiger now proceeds on the assumption that additional forenames, too, constitute information required to be reported under section 19(1) no. 1 to 4 German Anti-Money Laundering Act, such additional forenames should also be evident from the registers referred to in section 20(2) sentence 1 German Anti-Money Laundering Act. This would probably mean that implied notification would apply only in exceptional cases in practice where the beneficial owner has several forenames. This is because, in practice, commercial register entries or lists of shareholders do not always contain additional forenames. Neither is it common to provide additional forenames in reports under section 20 German Stock Corporation Act (Aktiengesetz – AktG) or under section 33 ff. Securities Trading Act (Wertpapierhandelsgesetz – WpHG) which may also lead to notification being implied through an entry in the business register.

No consequences for inconsistency reports

Meanwhile, according to the BVA FAQs 2021/I, a lack of additional forenames in the Transparency Register does not trigger an obligation to report an inconsistency. Practice has shown, however, that Bundesanzeiger encourages the reporting of all forenames of beneficial owners to the Transparency Register in inconsistency reports.

Alternative action

It remains to be seen what effect the change in the administrative view of Bundesanzeiger will have in practice. Strict precaution would require organisations to actively make a report to the Transparency Register in cases where, previously, the implied notification of section 20(2) German Anti-Money Laundering Act was relied upon despite the fact that not all forenames of the beneficial owner can be seen from the documents of the relevant organisation referred to in section 20(2) sentence 1 German Anti-Money Laundering Act. For existing entries, too, it may be worthwhile considering subsequently reporting any additional forenames of the beneficial owner as a strictly precautionary measure since Bundesanzeiger requires this sometimes.

The German Federal Government’s response to the brief inquiry (Kleine Anfrage) submitted by the FDP parliamentary group on 25 March 2021 (Bundestag paper 19/27617) provides no clarity. According to the FDP (Free Democratic Party) parliamentary group, the latest additions to the notification requirements based on the changes in the BVA FAQs go beyond the wording and purpose of the Anti-Money Laundering Act and conflict with the view held by Bafin, the German financial supervisory authority. The FDP parliamentary group therefore asked the Federal Government whether it agreed with the latest additions to the BVA FAQs or intended to critically review the legal view put forward by the BVA. If the Federal Government had been critical of the BVA’s legal opinion, which goes beyond the wording of the Anti-Money Laundering Act, it would have also been impossible to uphold Bundesanzeiger’s view regarding the obligation to report any additional names of the beneficial owner to the Transparency Register which is not covered by the wording of the German Anti-Money Laundering Act. However, in its response, the Federal Government basically supports the BVA’s view and approves of their interpretation of the Anti-Money Laundering Act.

In light of the above, it would be desirable if the BVA as the competent supervisory authority for Bundesanzeiger were to provide explicit clarification on the administrative practice with respect to reporting additional forenames of beneficial owners to the Transparency Register.

Please do not hesitate to contact us if you have any questions on the administrative view of Bundesanzeiger, on the BVA FAQs or on a potential need to take action (in particular regarding reports, corrections, applications for restricting access, fines or legal proceedings). We are constantly monitoring the developments with regard to Transparency Register obligations and keep in touch with the competent authorities on a regular basis.