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Prevention of money laundering and financing of terrorism. Comment to Order JUS 1256/2019 regarding the forms to be completed by the Providers of Corporate Services

"On December 28, Order JUS / 1256/2019, of December 26, was published, relating to the registration in the Mercantile Registry of natural or legal persons who professionally provide the services described in article 2.1. O) of Law 10/2010. "

On December 28, the Order JUS / 1256/2019, of December 26, was published, relating to the registration in the Mercantile Registry of natural or legal persons who professionally provide the services described in article 2.1.o) of Law 10/2010.

Regardless of the possible discussion on the convenience or excess in the implementation of the IV Directive by our legislator when imposing excessively rigorous obligations (1) to entities that provide corporate services (2)It seems clear that the information on the entities that professionally offered these services has not been available so far. This circumstance represented a great difficulty when assessing the risk of this sector and planning an adequate supervision of it. (3) These entities, whose main activity is to establish companies that are later put up for sale, and act on behalf of these companies in their management bodies, make it possible, since our legal system does not require the registration in the Mercantile Registry of shareholder changes, that companies in which the employees of the Service Provider appear as administrators and partners, can act in commercial traffic without it being possible to know their true owner.

Prevention of money laundering and financing of terrorism. Comment to Order JUS 1256/2019 regarding the forms to be completed by the Providers of Corporate Services.

As defined in its article 2, the purpose of this Order is to regulate the use of the necessary forms so that the people who provide services described in article 2.1.o) of this Law 10/2010 comply with their obligation to register in the Mercantile Registry and to make the annual declaration on said activities. That is, the presentation of these forms does not comply with all the obligations detailed in the Single Additional Provision of Law 10/2010, not even all those obligations whose non-compliance constitutes a minor infraction according to the regulation itself, these are: lack of registration in the Registry, lack of manifestation of submission to Law 10/2010 (4)  and lack of identification of beneficial ownership in the case of legal persons (5)Note that the information related to the activity is not included.

Prevention of money laundering and financing of terrorism. Comment to Order JUS 1256/2019 regarding the forms to be completed by the Providers of Corporate Services.

In our opinion, it would have been convenient to include information regarding the beneficial owner in these forms. Although it is true that this information is contained in the forms contained in Order JUS / 319/2018; since the obligation to declare beneficial ownership was linked to the deposit of accounts, the non-deposit of the same results in the non-declaration of the beneficial owner. If the possibility of declaring or updating the ultimate beneficiary had been included in this form, it would be possible to have a single document in which all the information about the service provider entity would be collected: real owner, administrators, volume of operations or billing, without having to depend on the completion of another form contained in a different standard: Order JUS / 319/2018.

Nor is it possible to comply with the requirement of legal persons, contained in the DAU, to register any change of administrators, as well as any "modification of the social contract”. It would have been a good opportunity to record information regarding the change of administrators since it is one of the most relevant risks for entities that are really professionally engaged in the provision of corporate services; that is: the non-identification of the new managers once the company has been sold, allows to keep the last owners, purchaser of the company, anonymous. The fact that this information appears in the declaration of beneficial ownership in cases in which there is no beneficial owner by participation, does not seem, in our opinion, sufficient to minimize the risk and facilitate compliance with the requirement contained in the DAU.

Order JUS / 1256/2019, of December 26, therefore, includes the design of forms that, regardless of minor formal errors or lack of consistency between annexes, allow compliance with some of the obligations detailed in the DAU. It is hoped that the formal deficiencies will be clarified and corrected and the desirability of designing a single form that allows full compliance with the DAU will be reflected on.

Pilar Cruz-Guzman Flores. Expert in money laundering prevention

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About the Blog

Blog Tribute Antonio Moreno

Blog Tribute Antonio Moreno

Blog tribute to Antonio Moreno Espejo, who was Director of Authorizations and Registrations, National Securities Market Commission (CNMV), co-director of the Financial Markets Forum of Fide and Member of the Academic Council of FIDE. This collective blog contains articles and reflections generated by people who regularly participate in the Financial Markets Forum of Fide.

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