07.06.18 Service providers to companies: Watch out!
A new law of 29 March 2018 aims to perfect the legal arsenal for the fight against money laundering and terrorist financing. This law makes two important changes:
- the law now makes the “service providers to companies” subject to the law of 18 September 2017 on the prevention of money laundering (obligation to “Know Your Client”, reporting to CTIF-CFI, etc.);
- it obliges these providers to register with the Directorate-General for SME Policy of the FPS Economy; the list of registered providers will be available on the website of the FPS Economy.
The providers concerned are all natural or legal persons who provide, on a professional basis, one of the following services to third parties: (i) participation in the purchase or sale of shares of unlisted companies; (ii) provision of a registered office; or (iii) provision of a business, postal or administrative address and other related services. For example, business centres, co-working space providers, or even business providers will have to register. On the other hand, financial institutions, auditors, notaries and lawyers are excluded from the law as they are already subject to stringent anti-money laundering regulations.
Registration must be done prior to any provision of services, and this registration can only be accepted under certain conditions, in particular as regards the capability and reliability of service providers. On the capability side, persons are accepted who are validly registered with the Crossroad Bank for Enterprises and therefore expected to have the skills necessary for the activities carried out. As regards reliability, persons who have been sentenced to a criminal penalty or imprisonment of at least 6 months for money forging, falsification of documents, theft, extortion, concealment, fraud or breach of trust will be excluded.
There is an additional barrier for providers offering domiciliation services to enterprises: they will have to prove (i) that they have the capacity to provide domiciled persons with premises suitable for ensuring confidentiality and their functioning, (ii) that they can legitimately occupy the premises made available, and (iii) that they have entered into a contract with the domiciled persons regulating their use of the premises.
Service providers who do not comply with this law incur the risk of relatively heavy penalties: the offender risks a fine of between € 250 and € 100,000 and the ultimate beneficial owners, managers and administrators of legal persons can be held jointly and severally liable.
Fortunately, the legislator has provided for a transitional regime: service providers already in activity have 6 months from the entry into force of the law to submit their application for registration. They may continue their activities during the examination of the application.
Entry into force is scheduled no later than 1 September 2018.