The new Register of the Beneficial Owners becomes real… but with a limited access.

It was published on the Italian Official Journal of 25^th of May 2022 the decree adopted jointly by the Economic and Finance Ministry and the Economic Development Ministry (1).

It introduced in our legal system the Register of Beneficial Owners, in order to face with money laundering and terrorist financing, in actuation of art. 21, Par. 5 of Legislative Decree n. 231/2007.

The Ministerial Decree entered into force on the 9^th of June 2022, but it will produce effects only when other four additional measures will be published by the Ministry of Economic Development (2). So, the term for the enrolment in this new register might be at the end of the summer.

However, before explaining the rules introduced by the Ministerial Decree n. 55/2022, it is necessary to analyse the definition of “beneficial owner”.

It is clearly set forth in Article 20 of the Legislative Decree n. 231/2007 that the beneficial owner is the natural person(s) to whom the direct or indirect ownership of an entity is attributable.

Particularly, the Ministerial Decree n. 55/2022 sets a difference in the notion of beneficial owner in relation with three categories of entities following the provisions the Legislative Decree n. 231/2007 (“Anti-money laundering Decree”) (3):

• capital companies (joint stock company, and limited liability company;
• private legal persons (such as associations, foundations);
• trusts (et similia).

The purpose of this Decree, as highlighted by the market’s players and the European Union (4), it is to guarantee the competition between market players and to ensure the transparency of financial transactions.

In fact, the pursued goal is to demonstrate the validity of existing regulations and to more effectively oppose the financing of terrorist and criminal organizations. Nowadays, indeed, the trend of criminal organizations is running different business by hiding their identities behind lawful corporates and trusts in order to recycle illegal money.

This tendency is producing a twofold damage: (i) the first is ruin the market competition; (ii) the second is to consumers burden with the costs of such pathologic situations.

In addition to that, the spread of the Covid-19 pandemic has made corporations and companies more affected by the risk of "criminal infiltration".

For example, a clear proof of this is the increasing number of complaints of suspicious transactions reported to the FIU (Financial Intelligence Unit for Italy), during the first semester of 2021: there were exactly 32,5 % of complaints more than the last two years (5). So, this is an alarming information that will hopefully decrease with the establishment of that new register.

Now, many criminals may find it difficult to deliberately exploit the opacity of companies to hide their identities.

The Articles 3 and 4 of the Ministerial Decree n. 55/2022 have introduced a new obligation of public disclosure for beneficial owners of:

1. private legal persons;
2. capital companies;
3. trusts with relevant legal effects for tax purposes.

This classification is also respected in the structure of the Register, which is divided into two sections:

1. the first section (so-called “autonomous”) refers to the information about the beneficial ownership of companies with legal personality and private legal persons.
2. the second section (so-called “special”) relates to trusts and similar legal institutions.

The Decree pays attention to the stability and certainty of the information. In fact, it introduces many obligations in order to guarantee them: the first consists in reporting any changes in data and information related to the beneficial ownership. That obligation must be fulfilled within thirty days from the change (Article 3, Par. 3 of the Ministerial Decree n. 55/2022).

The same subjects must confirm all the information about the beneficial ownership published on their section of the Register every since year.

Furthermore, the decree provides the mandatory content of the information that must be reported by those subjects.

First of all, the reports must contain the identification data and citizenship of the individuals considered beneficial owners.

In addition to that directors, founders and legal representatives of enterprises with legal personality must disclose the percentage of share capital participations, who exercise the control or who has powers of legal representation, administration or management of the company (6).

The obligations are more complex for capital companies (7), as they must reveal their fiscal code, their name, their registered Office Address and their certified email address (8).

As well, regarding to trusts, the trustees (legal owners) must communicate their ID details, the name of the trust and the main information of the articles of association (date and place of constitution) (9).

So, Italian and European authorities (who must control companies and legal entities), but also all those obliged to anti-money laundering compliance (in according with Articles 18 and 19 of the Legislative Decree n. 231/2007), will find the main information on the new register.

However, there is another measure that might help to improve the market transparency: it is the so-called “public access” and it consists in allowing citizens (such as journalists), associations, foundations and private entities to access the information inside the register of the beneficial owners.

This is an important innovation for two reasons: (i) it introduces a "public control" of the information that will be published inside the register of beneficial owner. In fact, not only the authorities, but also individuals will be able to verify the truthfulness of the data. Immediately, these new rules will ensure higher quality of information and greater security of business transactions; (ii) secondly, there is a special discipline that regulates the access to such sensitive data, balancing, on one hand, the need for transparency and, on the other hand, the interest in privacy for those who are beneficial owners.

It is obvious that these measures take into consideration needs and interests of privacy in order to reach a balance between market transparency and the respect of beneficial owners’ human rights (10).

In fact, the access to the beneficial ownership information is not free, but it requires certain rules and conditions set forth by the Articles 5, 6 and 7 of the Ministerial Decree n. 55/2022:

1. the authorities’ access must be regulated by a special agreement signed by each authority with Unioncamere, which regulates its technical and operational modalities (11);
2. the access by persons who are obliged to check the identities of their clients (12) might be allowed only after an accreditation request submitted to the competent Chamber of Commerce (13);
3. the access by other subjects (so-called "Public Access"), is regulated in two different ways. The rules that must be respected depend on the information that the concerned subject party wants to consult.

Moreover, there is a substantial difference of treatment in terms of privacy between the protection given to the beneficial owners of:

1. private legal persons and capital companies, registered in the first section of the register;
2. trusts and similar entities registered in the second section.

In fact, the access to the information regarding the entities registered in first section does not need any particular requirements, except for the communication that must be notified to the competent Chamber of Commerce. In that declaration the person, the entity or the authority interested in obtaining such information must only communicate its interests in knowing who is the beneficial owner of a particular company (14).

On the contrary, the access to the data contained in the special section (relating to trusts et similia) is under conditions and requirements: (i) firstly, not only the subjects listed in Article 21, Par. 4, lett. d-bis) of the Legislative Decree n. 231/2007 are entitled to access the Register; (ii) secondly, those authorised entities must also receive a specific authorisation, that must be issued by the territorially competent Chamber of Commerce, within twenty days from the submission of the request (15).

Italian and the European institutions have decided to pursue their common goals by introducing this new regulation against market failures and by taking in consideration the right to privacy.

In this scenario, market players may need to be professionally assisted in order to see their rights protected in compliance with legal requirements.

The market players who could need assistance are those who must enroll themselves in the new register or the ones interested in drawing from this new source of information.

Professional assistance might be useful to avoid the financial penalties provided in case of failure to comply with reporting obligations.

Dott. Giacomo Bedeschi

Ph: Designed by Pixabay

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(1) Ministerial Decree n. 55/2022, published on the 11^th march 2022.

(2) Four measures must be published: (i) within sixty days of the entry into force of the Ministerial Decree n. 55/2022, the Ministry of Economic Development must promulgate a Decree in order to give obligees instructions on how to write the communication; (ii) the Ministry of Economic Development must publish (within 30 days of the Ministerial Decree n. 55/2022) a decree in order to identify the items and amounts of Chamber of Commerce secretarial fees (Article 8, Par. 1, Ministerial Decree n. 55/2022); (iii) InfoCamere has to draw up a technical specification to be submitted to the prior verification of the Data Protection Authority, aimed at defining the appropriate technical and organizational measures to ensure a level of security appropriate to the risk of violating privacy rules indicated by the Reg. n. 2016/679 (Article 11, Par. 3 Ministerial Decree n. 55/2022); (iiii) a decree that certifies the efficiency of the system for reporting data and beneficial ownership information (Article 3, Par. 6 Ministerial Decree n. 55/2022).

(3) Beneficial owners of companies with legal personality are those who suit these criteria: (i) holding an interest of more than 25 percent of the client's capital, held by an individual or through subsidiaries, trust companies or intermediaries; (ii) holding the control of the majority of the votes exercisable at an ordinary meeting of shareholders or having the power of exercising a dominant influence; (iii) person or persons who have the powers of legal representation, administration or management of the company or client, in accordance with their respective organizational or statutory structures.

Beneficial owners of private legal entities are: (i) its founders; (ii) the beneficiaries, when they are identified or easily identifiable; (iii) the holders of powers of legal representation, management and administration.

The beneficial owners of trusts et similia are considered: (i) the trustees; (ii) persons who exercise equivalent rights, powers and faculties in related legal institutions, established and residing in Italy, who obtain and hold adequate, accurate and up-to-date information on the beneficial ownership of the trust, or related legal institution.

(4) III Directive anti-money laundering 2005/60/CE and IV Directive anti-money laundering 2015/849.

(5) For these reasons, we should appreciate the timeliness of that measure, which is published at the most critical moment for the world’s economy, after the Corona Virus pandemic and the outbreak of the war between Ukraine and Russia.

In fact, the results from the latest data obtained on the shareholders and exponents of more than 700.000,00 corporates are worrying. For example, it was found that about 10.000,00 companies have changed the beneficial owner in the period from March 2020 to October 2020 (data obtained by the last research completed by Cerved in the period of 2020-2021).

(6) Article 4, Par. 1, lett. b) of the Ministerial Decree n. 55/2022.

(7) Article 4, Par.1, lett. c) of the Ministerial Decree n. 55/2022.

(8) Pursuant to the Ministerial Decree n. 55/2022, it is mandatory that the obligees have to draw up the declaration of responsibility and awareness regarding the criminal penalties for false acts and statements made.

(9) Article 4, Par. 1, lett. d) of the Ministerial Decree n. 55/2022.

(10) Regulation (EU) 2016/679 of the European Parliament and of the Council applies to the processing of personal data under this Directive.

(11) Article 5, Par. 2 of the Ministerial Decree n. 55/2022.

(12) Articles 18, 19 of the Legislative Decree n. 231/2007.

(13) Article 6 of the Ministerial Decree n. 55/2022.

(14) The Ministerial Decree n. 55/2022 has introduced some measures to protect the third counterparty’s rights, including his right to privacy. In fact, he must be notified in case his name may appear among the beneficial ownership information. At the same time, he must be notified when the Chamber of Commerce discovers special situations that might involve his name. From the day that person receives this notice, he has the right to file a special request for opposition, at the territorially competent Chamber of Commerce. This Office must express its opinion either by confirming or rejecting the request.

(15) If the Pubic Authority does not answer within twenty days from the submission of the request, its silence must be considered such as a rejection of the request.