The Council and Parliament’s provisional agreement on parts of a comprehensive package to combat money laundering and terrorist financing places a strong focus on two crucial aspects: the transparency of beneficial ownership and the mitigation of risks associated with high-risk third countries.

With regard to beneficial ownership, it is emphasised that transparency and disclosure are crucial in order to effectively combat money laundering and terrorist financing. The agreement reaffirms the need to identify the actual persons (beneficial owners, or UBOs for short) who benefit from or control legal entities and to make this transparent in order to close possible loopholes.

We are particularly pleased with the clear definition of a threshold value for beneficial ownership: the agreement sets this at 25%. The associated provisions for multi-layered ownership and control structures are also clarified so that it is no longer possible to hide behind several layers of company ownership.  This includes the requirement for entities or arrangements associated with persons or entities subject to targeted financial sanctions to be flagged, as well as granting register authorities in charge of registers to conduct on-site inspections at the premises of legal entities if there are doubts about the accuracy of the information in their possession.  Furthermore, the agreement establishes that besides supervisory and public authorities and obliged entities, members of the public with legitimate interests, such as the press and civil society, may also access the registers.

With regard to risks from high-risk third countries, obliged entities are required to take enhanced due diligence measures when doing business with such countries. This is to ensure that the EU financial system is not jeopardised by weaknesses in the anti-money laundering and terrorist financing regulations of these countries.

The agreement emphasises the importance of a risk-based approach and allows Member States and obliged entities to take specific measures to adequately assess and address risks. The texts will now be submitted to the representatives of the Member States and the European Parliament for approval before being formally adopted and published in the Official Journal of the EU.

It is therefore clear that without appropriate digital tools such as Trustnet.Trade from Cargodian for analysing the risks associated with business partners and documenting the outcomes of the risk analysis and assessment, which include identifying beneficial owners (UBO) and assessing risk in specific countries, it will not be possible to meet the new requirements.