“Blessed are those who possess” is a well-known quote that very much reveals, even today, as a system of values, the ethics of our society. It is an expression that interprets the latin quote “Beati possidentes”, which, according to some people, is attributed to Euripides.
It seems, though, that the international legal order does not blindly agree with such assumptions anymore. Assets are now investigated thoroughly in order to discover whether they have a lawful origin. Legalization of income that comes from illegal activities is getting harder by the day.
The registration of bearer shares is a step to that direction. Another step is identifying the actual shareholders of S.A.s, or maybe further than that: searching for the real beneficiaries “behind” those appearing as shareholders. Towards the direction of revealing the beneficiaries are clearly heading: a) Act 4557/2018 (which was recently updated), as well as b) the very recent Ministerial Decree on the creation of the Central Registry of Beneficial Owners.
Things are not that simple!
Europol, among others, is seeking to locate, in a trans-European level, all assets that do not derive from lawful activities, to detect all attempts of inserting money deriving from illegal activities into the “lawful” economy as well as money laundering networks relating to such attempts. In details: “… organized crime, in most cases, shares a common denominator – the financial motive. Organized crime organizations increase their assets and then insert those assets into the “lawful” economy through money laundering schemes.” Tracking those assets means tracking the networks” (in other words: “follow the money”).
This targeting is common on an international level. Our country’s legal system (being always updated and enforced) is heading towards that direction, mainly by following international developments as well as european directives.
Act 4557/2018 on money laundering
This Act is under the title: “Prevention and repression of laundering money deriving from criminal activities and the funding of terrorism – integration of Directive (EU) 2015/849”.
The aim of the Act is defined in its introductory provision, (article 1): ”the integration in the Greek Legal System of Directive (EU) 2015/849 of the European Parliament and the Council of 20th of May 2015“ on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC” and the codification of the relevant provisions in national legislation”.
Who does this Act concern?
Article 2 of this Act defines the objective of the Act altogether: “preventing and repressing laundering money that derives from illegal activities and terrorist funding…”,
When first glancing at this article one will most likely thing that this Act does not concern them or (most) people they know. But when looking at it a bit more carefully, this act does not only address assets that derive from terrorism, guns, drugs, human trafficking or other detestable (to most) activities. This Act applies to so many cases. Article 2 paragraph 3 states that: “Laundering money deriving from criminal activities is the case even when the criminal activities took place in a different state, as long as such those activities would be illegal under Greek law, had they taken place in Greece.”
The “predicate offence”
The infamous “predicate offences” are, as far as this Act and all relevant acts are concerned, all offenses “generating” an (unlawful) pecuniary advantage and can possibly result in laundering money deriving from criminal activities. On the list of “predicate offences” we find not only offences that receive the utmost condemnt by society (e.g. terrorist acts, human trafficking, drugs or guns) but also offences (par. 4. XVI) that relate to tax evasion, not paying debts owed to the State as well as offences punishable with the minimum sentence of six (6) months, from which a “pecuniary advantage can be obtained”: this list is proven to be extremely long and “wide”.
Special (and Central) Registry of Beneficial Owners
Act 4557/2018, article 20 (as recently amended by article 62 Act 4607/2019 – Government Gazette Α 65/24.4.2019) provides for the creation of a Special and Central Registry of Beneficial Owners. According to that provision, the legal representative of all legal entities residing or taxed in Greece is obligated to keep in a Special Registry of Beneficial Owners with detailed data about the legal entities’ beneficial owners. That Special Registry is registered with the Central Registry of Beneficial Owners, which is kept at the General Secretariat of Information System of Ministry of Finance.
Information registered on the Special Registry
Paragraph 1 of article 20, Act 4557/2018 provides that: “1. Companies and other legal entities residing in Greece or doing business that is taxed in Greece are obligated to collect and keep a special registry in their headquarters with adequate, accurate and updated information regarding their beneficial owners. These data must at least include the first and last name, date of birth, citizenship and county of residence of the beneficial owners, as well as the kind and extend of the rights they hold. The registry is updated with all necessary information for the identification of the beneficial owner. The legal representative of the legal entity is responsible for keeping the special registry well-documented and updated … and … is registered with the Central Registry of Beneficial Owners … within sixty (60) days from the date of the phased registration per type of legal entity, as determined by the decision of paragraph 11. Changes of the beneficial owner’s information have to be registered within sixty (60) days after they take place.”.
Keeping of the Central Registry and its interconnections
Paragraphs 4 and 5 of article 20 of Act 4557/2018 provide, among other things, that:
“4. within the General Secretariat of Information System (G.S.I.S.) is created, with the use of an internet application, the Central Registry of Beneficial Owners, which is electronically connected with the tax registration number of all legal entities and for which the Independent Authority for Public Revenue (IAPR) keeps all the necessary data from the tax registrations, despite other provisions in place…
- The General Registry can, also, be connected to the Hellenic Business Registry of Ministry of Finance…”
Sanctions for not keeping the Registry of Beneficial Owners
In case the Registry of Beneficial Owners is not kept, there are sanctions in place (par. 8 and 9 of article 20 of Act 4557/2018): If the legal entity liable does not provide a tax clearance certificate, there is a financial penalty of ten thousand (10.000) euro (which doubles in case of failure to comply) are only some of the sanctions. The rest: Much more serious!
The (implementing) decision of the Minister of Finance
In the provision of par. 11 of article 20 of Act 4557/2018, there was a provision for the publication of a decision of the Minister of Finance for the establishing and the details of operation of the Central Registry of Beneficial Owners. The relevant decision of the Minister of Finance, under the n. 67343 ΕΞ 2019, decision was very recently published (Government Gazette B, no. 2443, 20.6.2019): The Central Registry of Beneficial Owners is now reality.
The obligation to register the information of the beneficial owners in the Registry for most company types is extended from 14.10.2019 to 29.11.2019. For the rest legal entities, it begins on the 16.9.2019.
Someone may think that they are “blessed those who possess”. But they are not “blessed” those who possess assets and chose to do so in secret.
In cases where those assets were obtained through illicit activities, who (besides those directly involved) could make any comment?
But, when assets are obtained in a completely lawful way and those who “possess” have chosen not to present them in a “glass box” as a way of life, for their protection, in the context of their national or international tax planning or/and any other (not ethically reprehensible) reason?
The thinking behind the registration of the Beneficial Owners is not, of course, blameworthy. The restriction, though, of the beneficiaries’ economic freedom cannot be ignored – at when it comes to the righteous ones among them. Even more so: the Beneficial owners are in actual danger from a possible (unlawful) disclosure of their financial assets and data as well as from unauthorized people possibly accessing the Central Registry of Beneficial Owners.
In any case: the recent publication of the decision of the Minister of Finance, which activates the provisions of the Act for the creation of the Central Registry of Beneficial Owners, is a fact. All liable legal (and natural) persons must comply, within the specific time limits set.
Everything, from now on, are in (almost) plain view and, in any case, “under the eye” of the authorities.
The sanctions defined by law are not to be taken lightly. Non compliance or (even worse) the concealment of the Beneficial Owners is certain to create, further, serious problems for those involved as well as those liable.
So, in the end: “Beati possidentes”?
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (June, 30rd, 2019).