Under the Beneficial Owners’ Register Act (WiEReG) legal entities, including limited liability companies and stock corporations, are obliged to establish the identities of their beneficial owners. This results in what are often time-consuming and extensive retention and submission obligations. Such organisational and cost-intensive efforts can be minimised by using what is called "compliance package": For notification purposes, lawyers can be instructed to collectively transmit to the register all the documents required for verification (which vary from legal entity to legal entity) in the form of a compliance package.
After the documents have been transmitted, companies subject to due diligence obligations for the prevention of money laundering and the financing of terrorism, such as credit and financial institutions, tax advisors, certified public accountants and lawyers, may access these documents directly without having to request them from the legal entity. For example, it is obligatory to establish and verify beneficial owners in real estate transactions, and this obligation can be fulfilled quickly on the basis of the documents in the package. The advantage of the process is that it is no longer necessary to repeatedly request documents until they are eventually sent; viewing the compliance package instead helps save on costs and accelerates potentially critical processes (e.g. loan financing).
Furthermore, the transmission of a complete compliance package is a digital way to comply with the retention obligations of legal entities; these have to retain copies of the documents and information required for due diligence purposes for at least five years after an individual’s beneficial ownership has ended. And there is yet another advantage: subordinate legal entities can use the compliance packages of superior legal entities (e.g. international groups or private foundations) by reference, which results in considerable cost savings. Furthermore, the retention obligation of the subordinate legal entities is thus also met in digital form. If necessary or desired, access to a compliance package may be restricted; in such a case, it may only be viewed by the parties obliged to do so as specified in the notification. Moreover, it is possible to request access directly from the legal entity or its lawyer; access may then be approved or denied electronically. Once a year, there is a need to check whether registered beneficial owners need to be updated. If there have been no changes, it is only necessary to obtain a renewal of the proof of existence from abroad, which can often be done with very little effort.
In summary, compliance packages can considerably reduce the burden on legal entities obliged to report to the Beneficial Owners’ Register and they can significantly speed up processes, thus saving time and money.
As always, the KWR disute resolution tem will be happy to assist you in this respect.